Charlotte-area home prices rose 7.3percent in August from a year ago, as the region logged 18 months in a row of year-over-year gains, according to the Standard & Poor’s Case-Shiller index report. Compared with July, prices were up 1 percent in the area.
Nationwide, home prices rose 12.8percent on an annual basis in 20 cities tracked by the report. From July, prices were up 1.3percent. Case-Shiller tracks existing-home sales.
But rising mortgage rates and fewer applications for home purchases continue to slow price gains in the U.S., said David Blitzer, chairman of the Index Committee for S&P Dow Jones Indices. In 16 U.S. cities, but not Charlotte, price increases from July to August were smaller than increases from June to July.
“That kind of pattern has been around for the last few months,” Blitzer told the Observer. “We’re seeing other data that suggests that the housing recovery is beginning to ease back a little bit.”
In the Charlotte area, home prices have been climbing on a year-over-year basis since March 2012. Since that time, the region had its largest year-over-year gain in May, when prices were up 7.9percent. Price gains slowed in June to 7.7percent and again in July to 7.2percent.
Hadi Atri, president and CEO of Charlotte-based Re/Max Executive Realty, attributed the deceleration in price increases to higher mortgage rates coupled with a normal housing market slowdown before the start of the school year. The lower demand dragged down prices, he said.
Home prices in Charlotte and elsewhere are being boosted in part by dwindling inventories of homes for sale. Atri said Charlotte continues to see multiple bids for some homes.
“Is it more than we used to have a year ago? Absolutely,” he said.
Multiple offers are most common in south Charlotte, the Lake Norman area and Fort Mill, S.C., he said.
“We’ve got less inventory than we’ve had since, I think, 2006. We do have a shortage,” he said.
Industry insiders say pent-up demand for homes is depleting inventories, as are purchases from large, out-of-state investors. Such investors have been buying up homes to rent them out. A report last month by RealtyTrac showed those investors are responsible for one in five Charlotte-area home purchases, making the region the second-busiest market in the U.S. for such buyers.
Last week, the chief economist for the National Association of Realtors said during a visit to Charlotte that the area and the rest of the U.S. will continue to have a shortage of homes for sale this year and into next. One factor is not enough new home construction, as small builders face challenges getting construction loans, the economist, Lawrence Yun, said.
Nationwide, average home prices are back to mid-2004 levels, the Case-Shiller report said. In Charlotte, prices have returned to levels not seen since late 2008. But home prices in Charlotte and nationwide are below the highs of 2007, just before the recession and housing downturn.
Rising mortgage rates and home prices are said to be lowering demand for homes. The average rate for a 30-year fixed mortgage was 4.13percent last week, up from 3.41percent a year ago, according to Freddie Mac.
On Monday, the National Association of Realtors said pending sales of existing U.S. homes fell for the fourth consecutive month in September, driven by higher mortgage rates and home prices. The forward-looking indicator dropped to its lowest level since December 2012.
Like some other real estate insiders, Atri, of Re/Max Executive, said he expects Charlotte’s sizable annual housing price gains to continue slowing.
“We’re not going to have the price increases that we had in 2012 and ’13,” he said. “Three to 4 percent is normal.”
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