Home prices in 20 U.S. cities rose at a slower pace than forecast in the year ended in April as declining affordability put a lid on appreciation.
The S&P/Case-Shiller index of property values increased 10.8% from April 2013, the smallest 12-month gain in more than a year, after rising 12.4% in March, the group reported.
“It’s a movement toward a more normal market,” said Scott Anderson, chief economist at Bank of the West. “We’re seeing a normalization of the market going forward.”
The median projection of 25 economists in a Bloomberg News survey called for an 11.5 % year-over-year increase in April. The S&P/Case-Shiller Index is based on a three-month average, which means the April figure was influenced by repeat sales transactions in February and March.
Home prices adjusted for seasonal variations increased 0.2% in April from the prior month, the smallest gain since February 2012 and less than the 0.8% median forecast in the Bloomberg survey. Unadjusted prices rose 1.1%.
The year-over-year gauge, based on records dating to 2001, provides a better indication of price trends than the monthly figure, the group has said. Economists Karl Case and Robert Shiller created the index.
All 20 cities in the index showed a year-over-year gain, led by an 18.8 % increase in Las Vegas and an 18% advance in San Francisco. Cleveland showed the smallest year-over-year increase, with prices rising 2.7%.