Asking prices for homes listed for sale on Trulia were up a seasonally adjusted 3.1 percent in the three months through August from the previous quarter, according to Trulia’s August price and rent report. However, Trulia Chief Economist Jed Kolko expects the upward price trend to slow based on rising mortgage rates, growing housing supply and a slowdown in investor activity.
Recoveries in local markets — beyond price gains — are driven by construction, Kolko noted in a blog post on the release at Trulia, and 2013 construction permits are just “60 to 70 percent of the average levels seen between 1990 and 2012.”
Markets like Las Vegas, Detroit, Atlanta and Sacramento, Calif., that have seen large price gains recently are places with below-normal construction activity largely because those markets were hit hardest by the housing crash and so were set up to experience bigger price increases in the recovery. Builders don’t want to put up as many homes in markets like these where there are an oversupply of bargain homes and higher vacancies, Kolko said.
Instead, he wrote, builders are looking to markets like Houston, Boston, Oklahoma City and Austin, Texas, that experienced less tumult and fewer price swings during the housing crash, to ramp up their activity.
Overall, rents rose 3.5 percent in August from August 2012 with a majority of that increase associated with apartment units (3.9 percent) versus single-family home rentals (1.6 percent), according to the release.