Charlotte-area home prices rose 7.2 percent in January from a year ago, according to a report Tuesday. But the region’s sizable annual gains continue to moderate as momentum in the U.S. housing market appears to be cooling.
Home prices in Charlotte have risen rapidly during the past year or so. Industry insiders attribute the large year-over-year gains to supply and demand as potential buyers face low inventories of homes for sale.
Prices in Charlotte and elsewhere are increasing at a slower annual pace. January marked the third month in a row that annual appreciation in Charlotte eased, according to the Standard & Poor’s Case-Shiller index.
Nationally, prices rose 13.2 percent in January. Charlotte was among the 12 cities in the 20-city index that posted slower annual gains.
Economists and industry insiders expect U.S. home prices to keep rising this year but at a slower pace.
“Although most analysts do not expect the same rapid increases we saw last year, the consensus is for moderating gains,” David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a statement.
Severe weather this winter was a drag on the housing market in Charlotte and other parts of the U.S. Heavy snow that fell across the Charlotte region in January kept would-be buyers from looking for homes and likely discouraged some potential sellers from listing.
“The housing recovery may have taken a breather due to the cold weather,” Blitzer said.
The housing market typically slows in winter, but other factors could also be involved in annual price gains easing. Mortgage rates in January were a percentage point higher than a year ago, hurting affordability and perhaps demand.
Mark Vitner, senior economist for Wells Fargo Securities, said first-time homebuyers have felt the sting of rising home prices the most. As it is, such buyers have largely been on the sidelines during the housing recovery, restrained by weak job growth and tight requirements to obtain loans, he said.
Charlotte’s supply of homes for sale is not as tight as inventories in other markets, Vitner said. Also, he said, Charlotte is seeing strong job growth.
January’s appreciation marked the Charlotte region’s lowest annual gain since last summer, according to the Standard & Poor’s report.
Average home prices across the U.S. are back to mid-2004 levels, but about 20 percent below peak prices in mid-2006, according to Case-Shiller data. In Charlotte, prices are back at spring 2006 levels, but below peak prices in August 2007.
On a monthly basis, Charlotte home prices fell 0.1 percent from December, continuing a trend from the previous month. Eleven other cities saw prices fall in January from December.
Joe Rempson, president of the Charlotte Regional Realtor Association, said it’s not a bad thing that year-over-year price gains are slowing.
“Some of it is a sign of the market stabilizing and getting back to a more normal market,” he said.
Like many others in the local real estate industry, Rempson is watching to see whether listings will rise this spring, which could help moderate prices further. He said some would-be sellers are waiting for more springlike weather before putting their home on the market.
“Springtime is always our peak selling season,” he said. “We’ve got greener grass, we’ve got pretty flowers. Houses just show better. The canvas looks much more appealing.”