US home prices rose 2.1% from a year ago, affordable housing stock shrinks

WASHINGTON (AP) — U.S. home prices increased modestly in September from a year ago, as roughly seven years of rising home values have hurt affordability.

The S&P CoreLogic Case-Shiller 20-city home price index rose 2.1 percent in September from a year ago, up from a 2 percent annual gain in August, according to a Tuesday report.

“For many buyers, the fall housing market provides several challenges and opportunities,” said George Ratiu, senior economist at realtor.com. “While lower financing costs and a rising number of new homes are welcome signs in a market parched for inventory, prices are still climbing and the number of existing houses in the affordable price range is down by double-digits.”

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Prices have so steadily outpaced wage growth for several years that the market is now constrained by buyers’ capacity to pay. Home values have tumbled 0.7 percent in San Francisco and increased just 0.8 percent in New York and 1.7 percent in Seattle.

Ralph McLaughlin, deputy chief economist at CoreLogic, noted that prices in San Francisco were climbing 9.9 percent annually just a year ago, evidence of how swift the deceleration has been.

Still, there are signs that low mortgage rates are boosting demand and prices could increase at a faster pace in the months ahead as there is a shortage of listings.

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Of the major metro areas, Phoenix led with annual price gains of 6 percent, followed by Charlotte at 4.6 percent and Tampa at 4.5 percent.