U.S. home prices that have galloped higher this year will slow down in 2014 as more sellers become willing and able to place their homes on the market, according to a Wednesday research note.Analysts at Capital Economics expect annual home-price growth to hit about 4% next year, compared with a rate that recently exceeded 13%.
“We expect this year to mark the peak for house-price inflation, and anticipate that the rate of price rises will more than halve in 2014,” according to the note.
Low inventory levels have supported the rapid gains in home prices, which, in turn, are enticing sellers to place their homes on the market, including properties that have regained equity.
“Rapidly increasing house prices have been particularly important in bringing sellers who were previously in negative equity back to the market,” analysts wrote.
Capital Economics expects the supply of homes available for sale to rise to 2.5 million in 2014 from 2.2 million this year, including large growth for new homes.
“Even with distressed supply falling, we are forecasting a considerable increase in the inventory of homes for sale over the next few years,” analysts wrote.
Article curated from The Wall Street Journal's Market Watch
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