CoreLogic Case-Shiller Indices Register 10.2% Annual Gain in Q1

In the first quarter of 2013, home prices rose by 10.2%, the first double-digit gain since the peak of the housing bubble seven years ago, according to data from CoreLogic.

As rising home prices and mortgage interest rates begin to affect affordability and demand and home inventory becomes more balance, analysis from CoreLogic (CLGX) forecasts that price appreciation will start to decelerate in 2014.

Slowly, as more and more homeowners consider selling their homes to lock in capital gains, the pressure that has been driving prices upward will subside.

"Record levels of affordability, a slowly improving job market, and very small inventories of new and existing homes for sale will continue to drive U.S. home price appreciation during the summer," said David Stiff, chief economist for CoreLogic Case-Shiller.

Several California markets are among the top markets for price gains over the past year.

San Jose, California, posted a 23.7 percent price gain; San Francisco posted a 21.1 percent price gain; and Sacramento, California, experienced a 21.0 percent price gain.

Phoenix, Arizona, and Las Vegas recorded price increases of 22.8 percent and 20.9 percent, respectively.

However, of these notable markets, San Francisco is the only one where price gains are expected to continue in the double digits over the next year. Case-Shiller predicts a 10.5 percent gain in the metro.

It’s no surprise that these markets are also facing extremely tight inventories of homes for sale.

In markets that are particularly favorable to sellers, inventory is extremely tight. Detroit, Phoenix and Sacramento have approximately a three-month supply of active listings, while Miami hovers around five and a half months.

With inventory so tight in many markets, new housing construction is also ramping up, although more slowly than expected. CoreLogic notes that builder confidence, which bodes well for construction activity, has been soaring, so it is expected that the pace of new construction is expected to increase more rapidly.

"Although double-digit gains usually indicate unsustainable appreciation and, possibly, bubbles in some metro areas, there is less need for concern now since home prices remain 26% below their peak nationally and are even lower in many metro markets," said Stiff.