Economy Watch: Residential Price Appreciation Slows Down; Gas Prices Headed Downward
- Oct 21, 2013
Home value specialist Zillow said on Friday that the pace of residential price appreciation nationwide slowed down in the third quarter of 2013, and even turned negative in some markets. The U.S. Zillow Home Value Index stood at $163,000 as of the end of the third quarter, up 6.4 percent year over year and 1.2 percent from the end of the second quarter.
But there was no change in national home values in September compared with August, and the monthly pace of home value growth has declined in each of the past three months. Among the top 30 largest metro areas covered by Zillow, half showed negative monthly appreciation at the end of the third quarter. Until July, all of those markets recorded positive monthly appreciation, and none exhibited a monthly pace slower than 1 percent month over month.
“Far from being a negative sign, we’re relieved to see more noticeable signs of cooling in the market,” Zillow chief economist Stan Humphries said in a statement. “If home values continued to rise as they have, relatively unchecked, we would almost certainly be headed into another bubble cycle, and nobody wants that.”
Gas Prices Headed Downward
The Energy Information Administration reported on Friday that gas prices have been dropping steadily since this time last year, and predicted that they will continue to drop for the rest of the year and into 2014. On the whole, lower gas prices are good for the economy, as it frees up consumer and business spending for other purposes.
According to EIA, the average price for a gallon of regular is $3.43, compared to $3.89 per gallon in mid-October 2012. The average price for a gallon of regular dropped by 18 cents per gallon during September 2013 alone, and the agency predicts that the prices will end this year at $3.34 per gallon.
Underlying the downward pressure on gas prices are drops in the international price of oil. EIA expects the Brent crude oil price to continue to weaken, averaging $107 per barrel during the fourth quarter of 2013 and $102 per barrel in 2014. It predicts that West Texas Intermediate crude will average $101 per barrel during the fourth quarter of 2013 and $96 per barrel during 2014.
Wall Street had an up day on Friday, with the Dow Jones Industrial Average gaining 28 points, or 0.18 percent. The S&P 500 was up 0.65 percent and the Nasdaq gained 1.32 percent.