Home prices last year posted their largest annual gain since 2005, according to a report released Tuesday, but signs are emerging that price gains are leveling off.
U.S. prices increased 11.3% in the fourth quarter compared with a year earlier, according to the Standard & Poor’s/Case-Shiller price index. The Case-Shiller index that measures home prices in 20 major metro areas rose 13.4% over the same span. A separate index, released Tuesday by the Federal Housing Finance Agency, said prices had gone up 7.7%, also to an eight-year high.
Rising home prices are proving to be a double-edged sword because, together with higher mortgage rates, they are reducing affordability, which has curbed sales. “Home prices will probably go up this year, but not like they’ve been,” said Robert Shiller, the Yale University economist who co-founded the index that bears his name. “It’s going to slow down.”