Home prices ticked up in October, but the pace of growth remains slow

Some good news about the housing market: Pending home sales jumped up in November, according to the National Association of Realtors. On the other hand, the Case-Shiller Home Price Index and the Federal Housing Finance Agency both released new data Tuesday, and both showed slow growth.

Prices are the first thing most buyers look at before they even think of making a home purchase, but those numbers are important for homeowners, too, because for most of them, their house is among their biggest investments, said Timothy Savage, a real estate professor at New York University.

“They're paying a 30-year fixed mortgage,” he said. “They slowly pay down that mortgage, the house ideally appreciates a bit in value.”

The latest Case-Shiller numbers, which go through October, show that appreciation has been slow, said Nick Godec with S&P Dow Jones Indices, which puts out the home price report.

“The latest print showed us that for the national index, we're looking at just a 1.4% year-over-year price increase,” he said.

And when you factor in inflation, he said, that means “real prices are are down overall.”

Though the numbers diverge a bit, depending where you look. The Northeast, led by New York, and the Midwest, led by Chicago, still have what Godec calls “quite healthy price appreciation.”

“Whereas if we look at the Sun Belt in particular, like in Florida, we're seeing a lot of pressure on prices and outright negative price returns in nominal terms,” he said.

That’s potentially bad news for owners and sellers there, but also an opportunity for buyers who have been sitting on the sidelines. 

Particularly in the South, part of the lag in prices can be explained by housing supply, said Susan Wachter, professor of real estate at the Wharton School of the University of Pennsylvania.

More houses built means lower prices. And, she said, another reason for some stagnation is a type of buyer resistance against prices for homes already being so high.

“Buyers simply can't afford these price levels, particularly given high mortgage rates. So there's kind of a buyer strike in many markets,” Wachter said.

On the other side, sellers could be taking their homes off the market because they’re not getting the higher prices they’d hoped for.

“There’s also a great deal of uncertainty in today’s economy, particularly in labor markets,” Wachter added.

Which she said could impact home prices too, because prospective homeowners may be wary of buying without knowing what their future employment status will be.