The pace of home price growth continued its downward trend as top cities across the country report a slight decline, the September S&P/Case-Shiller Home Price Indices reported.

Still, the 10-city composite climbed 4.8% year-over-year, down from 5.5% in August, while the 20-city composite increased 4.9% year-over-year, compared to 5.6% in August.

It was still the strongest month-on-month increase in house prices in seven months and, according to a client note from Capital Economics, further evidence that, after the recent slowdown, the pace of house price growth is picking up again.

Both the national and composite Indices were slightly negative in September, with the 10 and 20- city composites reporting a slight downturn while the National Index posted a -0.1% change for the month.

“Admittedly, that hasn’t come through in the quarterly or annual comparisons yet. Prices increased by just 0.5% during the third quarter as a whole, which is stronger than the second quarter’s 0.1%, but otherwise the weakest reading since Q1 2012 when prices were still falling,” says Paul Diggle, property economist for Capital Economics.

“The upshot is that, over a one-to-two year horizon, we think that price growth is likely to level off close to income growth. That means that while our forecast of 4% y/y price growth in the fourth quarter of this year is below the consensus of 6% (which would require a burst of growth of 3.3% q/q – not seen since 2005), our forecasts of 4% growth in subsequent years is stronger than the consensus,” Diggle says. “With the prospects for the wider US economy looking increasingly promising, that is a position that we are happy to occupy.”?