Home prices rose less than expected in April, according to the S&P/Case-Shiller home price index.
Prices in 20 major cities rose 0.45% month-over-month and 5.4% year-over-year.
Economists had forecast that the 20-city index rose 0.58% month-over-month for April, according to the Bloomberg consensus. And compared with the previous year, they forecast a 5.41% rise.
Prices compared with last year rose the most in Portland, Oregon; Seattle; and Denver.
“The housing sector continues to turn in a strong price performance with the S&P/Case-Shiller National Index rising at a 5% or greater annual rate for six consecutive months,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.
“However, the outlook is not without a lot of uncertainty and some risk. Last week’s vote by Great Britain to leave the European Union is the most recent political concern while the U.S. elections in the fall raise uncertainty and will distract home buyers and investors in the coming months.”
Blitzer also noted that some of the details in the data “hint at possible softness,” including seasonally adjusted figures showing that three cities actually saw lower prices in April, an increase from one in March.
Moreover, looking under the hood, there is a “growing divide between the top and bottom of the market that the Case-Shiller numbers don’t reveal,” Zillow chief economist Svenja Gudell wrote.
She continued (emphasis ours):
“Conditions nationwide and in most large metros are much more forgiving for current homeowners looking to move into a bigger, more expensive home than for younger, entry-level buyers just looking to get a toe-hold in the market. Home values for the least-expensive homes are growing twice as quickly as they are for the most-expensive homes, and the gap is widening. Given last week’s Brexit news and the ensuing market reaction, it doesn’t look like interest rates are going to rise meaningfully any time soon, which means it will remain cheap to finance a home for those that can afford one. But for many buyers, finding an affordable home to buy in the first place is likely to remain pretty tough.”
And as Trulia chief economist Ralph B. McLaughlin added:
“While the housing market continues to moderate, the rate of price gains is still outpacing income growth. Housing affordability continues to be a headwind for homebuyers in many of the country’s largest markets.”