Los Angeles-area home prices in May posted their smallest gain in more than a year, mirroring a slowdown nationally, a closely watched report said.
The Standard & Poor’s/Case-Shiller index of home prices, released Tuesday, said prices across L.A. and Orange counties climbed 12.3% compared with a year earlier. That’s the smallest increase since January 2013.
The housing market began to slow last summer amid higher prices and mortgage rates, and many buyers decided to put their home search on hold just as more homes have come up for sale, helping to temper price appreciation.
The slowdown was also seen nationally. Across the nation’s 20 largest cities, prices rose 9.3% in May — the smallest gain since February 2013.
Many economists, however, don’t expect prices to decline. Rather, they say, the market is normalizing after unsustainable gains in the first half of last year.
Price increases will likely slow further this year, reaching a mid-single-digit level, said PNC Financial Services Group chief economist Stuart Hoffman.
“This is roughly equal to income growth and thus is sustainable over the longer run,” he said in a research note.
All cities tracked by the index — except Tampa, Fla. and Charlotte, N.C. — saw smaller year-over-year price increases in May than in April.
The Case-Shiller index, created by economists Karl E. Case and Robert J. Shiller, is widely considered the most reliable read on home values. The housing index compares the latest sales of detached houses with previous sales and accounts for factors such as remodeling.
Follow me on Twitter @khouriandrew