Asking home prices are losing steam as mortgage rates rise, inventories expand, and investor demand declines. Nationally, asking prices dropped 0.3 percent in July – the first month-over-month (M-o-M) decline since November 2012. Seasonally adjusted, prices rose 3.3 percent quarter-over-quarter (Q-o-Q), down from a peak of 4.2 percent in April. Year-over-year (Y-o-Y), prices are up 11 percent nationally, according to Trulia’s July market report.
In 64 out of 100 U.S. metros, the quarterly asking home price gain was lower than in the previous quarter. This slowdown was most apparent in the West Coast where prices have rebounded strongly already. Among housing markets where asking prices rose sharply Y-o-Y, price gains dipped the most Q-o-Q in Las Vegas, Oakland, and San Francisco. Other California metros, including Sacramento, Ventura County, San Jose, and Fresno, saw Q-o-Q gains drop by at least two percentage points between April and July. Meanwhile, many metros in the South and Midwest are seeing price gains accelerate, such as Atlanta (3.2 percentage points higher in July versus April) and Detroit (3.7 percentage points).
|Hot Housing Markets Where Prices are Slowing Most|
|#||U.S. Metro||Y-o-Y %
= Difference in
Q-o-Q % change,
July minus April
|1||Las Vegas, NV||32.9%||7.5%||12.7%||-5.2%|
|3||San Francisco, CA||17.2%||3.0%||6.5%||-3.5%|
|6||Ventura County, CA||18.6%||5.3%||8.2%||-2.9%|
|7||Grand Rapids, MI||18.2%||5.1%||7.6%||-2.6%|
|8||San Jose, CA||20.9%||4.5%||6.9%||-2.4%|
|10||Salt Lake City, UT||17.4%||3.3%||4.6%||-1.3%|
|12||Orange County, CA||23.3%||5.9%||7.0%||-1.1%|
|13||Los Angeles, CA||20.9%||5.6%||6.7%||-1.1%|
|Table shows metros with the biggest decline in Q-o-Q asking prices between April and July, among metros with large Y-o-Y increases. The final column equals the difference between the third and second data columns, but the numbers might not appear to add up due to rounding.|
Asking Home Prices Outpace Rents in All Major Rental Markets
Rents rose 3.9 percent year-over-year nationally, which was a big increase compared with inflation or income growth, but small compared with asking home price gains. Even as asking home prices slow down, July was the first time that prices outpaced rents in the 25 largest rental markets since Trulia started tracking rent trends in March 2011.
|Housing Markets Where Rents Rose Most|
|#||U.S. Metro||Y-o-Y % change
|Y-o-Y % change
in home prices
|3||San Francisco, CA||8.1%||17.2%|
|Note: Among 25 largest rental markets|
“The asking home price slowdown in July could be the start of the return to normal price gains. The blazing fast price increases we’ve seen in recent months could not last, especially with rising mortgage rates, expanding inventory, and declining investor interest,” said Jed Kolko, Trulia’s Chief Economist.
“The biggest price slowdowns have come to some of the hottest local markets,” said Kolko. “California and Nevada remain the Wild West for asking home prices, with some of the sharpest drops during the bust, strongest rebounds over the past year, and now biggest slowdowns in the past quarter. In the rest of the country, the ride is less wild, but is on the same track: price gains have cooled in almost two-thirds of the largest metros.”
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