WASHINGTON — It was a great year for the stock market. And it was also a pretty good year for many people’s biggest investment: their homes.
In 2013’s last glimpse at the housing market, figures released Tuesday showed that home prices in major metro areas kept rising in October. Year-over-year, prices were up 13.6 percent, the biggest gain in seven years.
After plummeting during the housing bust, prices have increased steadily since the spring of 2012. But while prices in 20 major American metro areas increased 0.2 percent in October, without seasonal adjustment, the quick rebound in prices is slowing, according to the closely watched S&P/Case-Shiller data. Higher mortgage rates might slow the pace of improvement going forward, analysts say.
Nationally, the increase in home prices has moderated, the S&P/Case-Shiller analysis said. Prices decreased in nine metro areas between September and October, including Denver, Chicago and Washington, D.C., whereas just one saw price decreases between August and September.
“Monthly numbers show we are living on borrowed time and the boom is fading,” said David M. Blitzer of S&P Dow Jones Indices in an analysis of the new housing numbers. A big question, he said, is how quickly the Federal Reserve pulls back from its extraordinary efforts to keep rates low.
“The key economic question facing housing is the Fed’s future course to scale back quantitative easing and how this will affect mortgage rates,” Blitzer said. “Other housing data paint a mixed picture suggesting that we may be close to the peak gains in prices.” He added: “Most forecasts for home prices point to single-digit growth in 2014.”
In many metro areas where prices declined sharply — particularly those encompassing Sun Belt and Rust Belt cities such as Phoenix, Las Vegas and Detroit — similarly sharp rebounds followed. But generally, prices have not touched their pre-bust heights, with prices across the country remaining about 10 percent to 40 percent lower, the S&P/Case-Shiller data show. In Dallas and Denver, however, prices have hit new peaks, the report said.
Many economists expect price increases to moderate next year, with higher prices and higher mortgage costs making homes less affordable, even though the labor market recovery might pick up some steam and inventory might increase in some areas.
In December, the Fed said that improving economic conditions warranted the central bank starting to ease up on its stimulus efforts. The Fed said it would cut its monthly purchases of Treasury and mortgage-backed securities to $75 billion a month from $85 billion a month.
“Even after this reduction, we will be still expanding our holdings of longer-term securities at a rapid pace,” Ben S. Bernanke, the Fed chairman, said at a December news conference, his last before Janet L. Yellen takes over, pending Senate confirmation. “Our sizable and still-increasing holdings will continue to put downward pressure on longer-term interest rates, support mortgage markets, and make financial conditions more accommodative, which in turn should promote further progress in the labor market.”
In a separate report released Tuesday, the Conference Board, a research group, said that consumer confidence jumped to 78.1 in December, from 72.0 in November, with sentiment about current economic conditions reaching its highest level since the spring of 2008.
Many economists do expect jobs and income growth to improve next year, and to have a resulting effect on housing. “We expect that the improving employment picture next year will be accompanied by a sustained increase in interest rates, which in turn will roll over into the mortgage market,” said Doug Duncan, chief economist at Fannie Mae. He said the housing recovery might continue on a “modest upward trend.”