Slower Home Price Gains Expected

By Peter King,

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U.S. home prices are predicted to keep rising in 2013, though at a considerably slower pace than the year just completed.

A modest annual gain of 2.1 percent is predicted for the year, according to estimates released today by the real estate data firm Clear Capital That's down from an increase of 4.9 percent in 2012, a figure driven by strong gains in the latter part of the year.

Clear Capital projects a slowdown in part because prices this year are starting off at a higher level than in 2012, which benefited in part due to a rebound effect of prices coming off market lows. The increases may see some potential buyers getting priced out of the market this year, according to the company's analysis.

Fiscal cliff could have an impact

"Overall the housing recovery still shows evidence of pushing ahead, as indicated by our December home price trends and 2013 forecasts," said Dr. Alex Villacorta, Clear Capital director of research. He added "The housing landscape, however, could quickly shift should the broader economy tumble back into recessionary territory."

Villacorta said it was unclear whether residual effects of the fiscal cliff might negatively affect the housing market, either through a decrease in consumer buying power or by simply affecting consumer's perceptions. At the same time, he said the past year's gains suggest that home prices will have some resiliency.

The Western region saw the strongest price gains by far over the past year, with prices up 11.8 percent over the 12 months ending in December. More modest annual gains were seen in the South and Midwest, up 4.0 and 3.0 percent, respectively, while annual price gains in the Northeast were a relatively sluggish 1.5 percent.

Seattle expected to be tops in 2013

The nation's hottest housing market in 2013 is expected to be Seattle, where a strong housing recovery is already underway and Clear Capital predicts annual price gains of 13.5 percent over the next 12 months, owing in large part to robust employment there. Birmingham, Ala., is expected to see a 10 percent gain, while Bakersfield and Fresno, Calif., and Minneapolis are all expected to see annual price increases greater than 7 percent.

Only eight of the nation's 50 largest metropolitan areas are expected to see declines in housing prices, led by St. Louis with a predicted decline of 1.7 percent. The Chicago and Baltimore regions are also expected to see 12 month price declines of more than 1 percent.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance Real Estate
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