The housing market’s dramatic summer growth is cooling down as homebuyers trek through a winter slowdown.
Home prices dipped back down to 10.8% year-over-year growth, a meager decrease from last quarter’s 11% annual growth, the latest Clear Capital Home Data Index shows.
The HDI compares the most recent four months to the previous three months, with no fixed-start date to reduce time delay.
"As the year comes to a close, make no mistake, home prices across the country are cooling from the red-hot 2013 recovery," said Alex Villacorta, vice president of research and analytics at Clear Capital. "Though some market observers may take this as a sign of a deflating bubble, we see this as a natural, and welcomed evolution on the horizon of the new housing landscape."
In addition, the quarter growth witnessed a more substantial tumble and fell to 1.8% from the previous quarter's growth of 3.3%.
The Midwest and Northeast were the only two regions to experience small gains in yearly rates of growth over the previous quarter.
"Since the market trough in the fall of 2011, national prices are up 17%, undoubtedly a strong resurgence in overall prices. Yet, national prices today are back to where they were in 2003, indicating that overall the housing market is at pre-run-up norms," Villacorta added.
Meanwhile, REO sales made up 21.6% of all national sales over the previous quarter, which is significantly lower than peak rates of 41% in 2011. However, distressed activity, as a portion of sale saturation, is expected to increase over winter as buyers prepare for a more active spring season.
For the first time, Phoenix was kicked out of its number one spot on the top 15 performing cities list, as the city was one of the first markets to experience a sustained recovery alongside its high levels of distressed sale saturation.
"Understandably, many current home owners would like to see hot gains continue for some time to come. Market participants, however, are better served by a cooler and more sustainable recovery," Villacorta said. "Moderating gains will create a stable market, instilling confidence in a broader base of buyers."