Clear Capital’s midyear market report card says the industry needs to get used to less than 1% housing growth for the remainder of 2014.
That said, all total 2014 should see year-end housing gains of 3.9%, within the historic norms of 3-5% housing growth, Clear Capital’s analyst said. They note that from 1982 after the Carter recession, through 2013, home prices grew an average 3.2%.
“Our midyear forecast continues to support the initial 2014 projection for national price growth we made back in December 2013, with overall home prices expected to end the year up 3.9%,” said Alex Villacorta, vice president of research and analytics at Clear Capital. “While it might feel like a shock to market participants and observers who have grown used to double digit price growth, the market’s continued move back toward long-run historical levels and growth rates is something we have expected. What we will be watching for, however, is whether the market settles into this historical sweet spot or whether prices continue to underperform historical norms.
“The low price tier, one of the key drivers of the recovery, has put on the brakes. Through the end of 2014, national annual rates of growth will be more than cut in half from the current 12.4% to just 5.6%. By Q4, quarterly growth across all three price tiers is set to fall below 1%, with the low tier forecast showing the weakest quarterly growth of all,” the report states.