Trulia: Asking Price Rises Hitting the Brakes

Asking home prices rose 2% month-over-month in September and 11.5% on a year-over-year basis, but it is really hard to see in those numbers that growth in this area is slowing down, according to Trulia.

The number that really shows this is in the quarter-over-quarter number where the 3% gain is the smallest since February. The month-over-month comparison is volatile, while the year-over-year is a smoothed-out representation. Still, Trulia said, the year-over-year growth figures should start to shrink in coming months.

Trulia added that 89 of the nation’s 100 largest metropolitan areas had quarter-over-quarter price increases in September, down from 97 in June.

“Asking home prices give us the first look at where home sale prices are headed, and they point to a slowdown,” said Jed Kolko, Trulia’s chief economist. “After rising rapidly in the first half of 2013, asking prices in two thirds of the largest metros are cooling. In fact, asking prices are falling—not just rising more slowly—in 11 of the 100 largest metros, the most markets to see prices slip in six months.”

He added that the government shutdown could also have an effect on falling home prices. “A prolonged government shutdown could hurt housing demand in Washington and other metros that depend heavily on federal money. Worse, in the unlikely event that hitting the debt ceiling later this month causes the government to stop paying its bills or—worst of all—default, the resulting financial panic could send the economy and the housing market into a tailspin,” Kolko said.