Figure partly reflects weaker winter sales
By Christopher S. Rugaber
AP Economics Writer
WASHINGTON (AP) — U.S. home prices dipped in January for a third straight month, likely because of slower sales in recent months caused by cold weather, a limited supply of homes and higher mortgage rates.
The Standard & Poor’s/Case-Shiller 20-city home price index, released Tuesday, declined 0.1 percent from December to January, the same drop as the previous two months. That figure is not adjusted for seasonal variations, so the dip partly reflects weaker winter sales.
The index rose a healthy 13.2 percent in January compared with 12 months earlier. But that is down from a 13.4 percent increase in 2013 and is the second straight decrease.
Most economists aren’t concerned about the moderation in price gains. Home prices jumped over the past two years as very low mortgage rates pushed up sales. Meanwhile, the supply of available homes remained tight. Many homeowners couldn’t sell because they owed more on their mortgages than their houses were worth.
Meanwhile, investors swooped in and bid up prices in places like Las Vegas, Phoenix and other cities in the south and west.
“The home price appreciation we’ve been seeing is unsustainable,” said Stan Humphries, chief economist for real estate data provider Zillow. “It needs to moderate over time or we risk inflating another housing bubble.”
The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. Twelve cities reported price declines in January from the previous month. The biggest decline was in Chicago, where home prices dropped 1.2 percent, followed by Seattle at 0.8 percent.
Some economists say the Case-Shiller figures overstate recent price gains because they include foreclosures. Foreclosed homes usually sell at steep discounts. As the those sales decline, the index rises more sharply.
