In a poll of 31 property analysts Reuters
news agency found consensus that the growth of house prices in the U.S. has
peaked and that further increases over the next two years will be more
restrained. The analysts’ predictions
centered on a median 7.5 percent increase this year and a gain of only 4.0
percent by 2016.
Reuters says this is a significant
slowdown from the 12.4 percent jump in home values over the 12 months ended in
March that was recently reported by the SP/Case Shiller 20-City Composite
Index. The rate of increase has recently
slowed from that which occurred in the earlier months of that timeline.
The analysts agreed that further price
increases will likely be curbed by tight lending standards, slow wage growth,
and a lack of first-time buyers, a group that might be further restrained by
Results of the poll also included a
consensus that home resales would reach a 4.75 million annual rate in the
second quarter of 2014 and would continue that upward trajectory, reaching 5.10
million sales by the first quarter of next year. Resales were at an annual rate of 4.65 in
Among the questions the poll put to
respondents was whether the U.S. housing market was fairly valued. On a scale of one to 10, ranging from
extremely undervalued (one) to extremely overvalued responses were termed by
Reuters as fairly conservative, ranging between 3 and 7.5.
Reuters said the housing market lost some of its momentum in late 2013 and
early 2014 as mortgage rates rose and unusually cold weather caused the economy
to contract by an annual rate of 1 percent in the first quarter and residential
investment to drop by an annual rate of 5 percent.
Reuters said that more first-time
homebuyers would mean more robust growth but that much would also depend on
interest rates. Currently the average
30-year fixed rate is a little over 4 percent and is expected to rise to 4.5
percent this year and to 5.68 percent in 2016.