A key measure of home prices out Tuesday suggests the California housing recovery has stalled, at least for now.
Prices in the Los Angeles area were flat in August, according to the Case-Shiller Index. And they fell in San Francisco and San Diego as well.
Across the 20 major cities Case-Shiller tracks, they grew two-tenths of a percent, a pace slower than analysts expected. The declines were steeper if seasonal adjustments are taken into account, though some economists say those have become less reliable as home-buying patterns have shifted.
While prices are still climbing on a year-over-year basis — up 6.8% in Los Angeles — the numbers reflect a market that is plateauing as credit remains tight, home buyers back away from new higher price points and sellers begin to lower their expectations.
It may not be a bad thing for the market to stop and catch its breath, economists say. Home prices, especially in coastal California markets, have returned to levels that are unaffordable for most households, and a slowdown in prices, coupled with stronger job and income growth, could give more would-be buyers time to catch up. Still, prices here remain 18% below their peak in 2006, leaving some homeowners holding little or no equity in their homes.
The slowdown in price growth is beginning to have an impact on the market. The number of homes sold in the six-county Southland grew in September for the first time in a year.