February 27, 2018 - 2:16 pm
Updated February 27, 2018 - 2:59 pm
WASHINGTON — U.S. home prices rose at the fastest 12-month pace in more than three years in 2017, as potential home buyers fought over a limited number of available properties.
Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index jumped 6.3 percent in 2017, the most since June 2014. Home prices are rising much faster than wages and overall measure of inflation.
Southern Nevada was near the front of the pack for price growth. Among 20 cities in the report, Seattle posted the largest year-over-year increase in December, 12.7 percent, followed by Las Vegas at 11.1 percent and San Francisco at 9.2 percent.
Home prices are up around the country, but Seattle and Las Vegas are seeing growth that’s almost double the national average, Realtor.com senior economist Joseph Kirchner said in a statement.
He added that Las Vegas could take the top spot in Case-Shiller’s ranking this year, “as predicted” by his group’s 2018 housing forecast.
Realtor.com said in late November that Las Vegas would be the top area in the country for sales and price growth in 2018, with sales totals climbing 4.9 percent and prices rising 6.9 percent.
Steady hiring and broad economic growth are making it easier for more Americans to afford a house, spurring demand. Yet fewer Americans are listing their homes for sale, in some cases because they would face a higher mortgage rate if they bought a new home. The number of homes for sale in January was the lowest for that month on records dating back to 1999.
In Las Vegas, last year’s sales tally was among the highest ever despite the plunging availability. Around 46,600 homes traded hands last year, up 12 percent from 2016 and the third-highest tally on record, according to the Greater Las Vegas Association of Realtors, which pulls data from its resale-heavy listing service.
At year’s end, around 3,830 single-family homes were on the market without offers, down 36 percent year-over-year, the GLVAR reported.
Meanwhile, homebuilders fetched record prices in Las Vegas in 2017, and their sales tally was the highest in almost a decade, according to Home Builders Research.
David Blitzer, managing director at S&P Dow Jones indices, compared the run-up in home prices to the stock market gains of the past year.
“The rise in home prices should be causing the same nervous wonder aimed at the stock market after its recent bout of volatility,” Blitzer said. “We are experiencing a boom in home prices.”
Home prices in the S&P CoreLogic Case-Shiller 20 city index have soared 62 percent from their low point in the housing bust, Blitzer said. That’s much faster than the 12.4 percent increase in inflation.
Still, sales of existing homes have stalled in the past two months and may remain slow in response to sharp increases in mortgage rates since the beginning of the year. While the average 30-year mortgage rate of 4.4 percent is low by historic standards, that’s up from 4 percent at the beginning of the year. Sharp increases can slow sales.
A persistent slowdown in sales could rein in the pace of price appreciation. That might force some homeowners to list their homes for sale, before price gains slowed further, Aaron Terrazas, senior economist at Zillow, said.
Existing home sales dropped in January by the most in three years. New home sales also fell in January. Unseasonably cold weather may have pulled down sales across the board.
Review-Journal writer Eli Segall contributed to this report.