National home prices were up 10.1 percent year-over-year in the second quarter, but price appreciation is expected to fall out of the double-digits, reaching 5.4 percent by the beginning of next year, according to the ""CoreLogic Case-Shiller Home Price Indexes."":http://www.corelogic.com/research/case-shiller/corelogic-case-shiller-indexes-report-q2-2013.pdf[IMAGE]
Home price appreciation will continue to occur but will drop off even further moving forward, CoreLogic says. The company's national index predicts prices will rise 3.4 percent over the next five years.
""Combined with increased housing construction, expected increases in existing inventories should restrain price appreciation even if demand remains strong,"" said David Stiff, principal economist for CoreLogic Case-Shiller.
Currently, prices are rising in almost 90 percent of the nation's metro areas, according to Stiff. He also points out that prices are rising in all of the nation's metros where population is more than 1 million.
""The strongest growth continues to be recorded in cities that were at the center of the housing bubble, but investor demand in those markets appears to be waning, meaning rapid rates of price appreciation are likely unsustainable,"" Stiff said.
When observing metros with populations exceeding 950,000, CoreLogic Case-Shiller found four of the five[COLUMN_BREAK]
metros with the greatest annual price appreciation in the second quarter were in California.
Sacramento, California, experienced the greatest price growth--25.9 percent.
Las Vegas took the No. 2 spot with prices rising 24.7 percent over the year in the second quarter.
The three California markets to fill out the top five list were Oakland (23.7 percent), San Jose (21.9 percent), and Los Angeles (20.3 percent).
At the other end of the spectrum, four of the five metros with the smallest price appreciation are located in the Northeast.
Honolulu, Hawaii, and Edison, New Jersey, posted the smallest annual price gains in the second quarter--both at 1.1 percent.
They were followed by Hartford, Connecticut (1.3 percent); Long Island (1.9 percent); and Newark, New Jersey (2 percent).
Looking forward, CoreLogic Case-Shiller analysts expect a shift in the lineup over the next year.
Only two markets are expected to post double-digit gains--Oakland, California (11.1 percent), and Baltimore (10.8 percent).
Other markets with price gains anticipated in the top five through the second quarter of 2014 include Tuscon, Arizona (9.5 percent); Hartford, Connecticut (9.1 percent); and Santa Ana, California (8.8 percent).
Metros expected to post the smallest price gains over the next year are Miami (1.5 percent); Warren, Michigan (1.9 percent); Nashville (2 percent); Fort Lauderdale, Florida (2.2 percent); and Houston (2.7 percent).
CoreLogic notes first-time and trade-up buyers are starting to increase their roles in the market, albeit slowly, while investor demand is waning as fewer distressed homes are listed for sale.