By Vicki Needham - 08/07/14 06:27 PM EDT
After more than two years, home prices in the nation's largest markets are rising at a slower rate making the continued housing recovery more dependent on wage and job growth.
For the first time in 26 months, none of the largest 100 metro areas market had a year-over-year price increase of more than 15 percent, according to a new report released Thursday by Trulia.
The large swing in prices was fueled by investors and other home buyers scooping up bargains.
Now that home prices are roughly in line with long-term norms, there are fewer bargains for investors and less headroom for prices to rebound.
“Job growth is now more important than the rebound effect for fueling home-price gains,” the report said.
Markets with faster job growth have higher price increases – except for Detroit, which had job losses but big home-price gains.
Riverside-San Bernardino, the only West Coast market in the top 10, has the largest increase at 15 percent.
Birmingham, Ala. saw a 14.2 percent increase, Miami’s prices rose 14.1 percent and Atlanta’s are up 14 percent over the past year.
Those top four cities have all seen job gains — 4.3 percent, 1.2, 2.5 and 3 percent, respectively over the past year.
Detroit, which was fifth on the list, had a 13.7 percent price gain during the past year but was down 1 percent in jobs.
“The diminishing rebound effect means that local housing markets will rely more on jobs and wages to support housing demand and home prices, which is another step on the road to recovery,” the report said.
David Crowe, chief economist for the National Association of Home Builders, told The Hill last week that job creation is key to the housing market taking the next steps in its recovery.
The more people with jobs and rising wages the more household formations, especially by younger people who have struggled to make a purchase during the downturn.
The report showed that asking prices rose 0.8 percent in July, down from 1.2 percent in June. Asking prices are up7.8 percent on an annual basis.
Although prices aren’t rising as fast as they did in spring 2013, prices are increasing in most markets with 97 of 100 metros posting year-over-year price gains, and 94 posting quarter-over-quarter gains.
Meanwhile, rents rose 6.1 percent nationally, with rents increasing more in markets with faster job growth. But, unlike home prices, rents are rising faster in big cities than in more sprawling markets.