February 05, 2015
That is the logical conclusion that would be drawn from an article headlined that “U.S. home price gains weakened in December on slower sales.”
The piece begins:
“U.S. home values rose at a modest pace in December, a sign there are too few potential buyers to bid up prices.
“Real estate data provider CoreLogic says home prices rose 5 percent in December from 12 months earlier. That is down from the 5.5 percent price gain recorded in November. It’s much lower than the double-digit gains that occurred last year.”
Actually, since U.S. house prices are already above their trend level, this is a sign that the market is stabilizing, as one might expect following a sharp tumble and a rapid upswing in prices. Over the long-term house prices have risen roughly in step with the overall rate of inflation. Since inflation was around 1.0 percent in 2014, house prices are still rising considerably more rapidly that would be expected based on their long-term trend. This is the opposite of the story conveyed in this article.
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