Housing recovery ‘changing shape,’ hinges on job growth, report says

After two years of rebounding off the bottom of a bust, the recovery in the housing market is “changing shape” this summer, and any new price gains will depend more on job growth and economic fundamentals.

That’s according to a new study out Thursday from real estate website Trulia, which found home prices still growing, but more slowly, nearly everywhere in the U.S.

Of the nation’s 100 largest metro areas, 97 recorded year-over-year price gains in July, Trulia said, but for the first time in more than two years, none were growing at an annual rate faster than 15%. And only one Western market -- the Inland Empire -- remained in the top 10 fastest-growing markets for price.

That’s a big change from last year, when many markets in California and the Southwest were seeing big price run-ups as buyers scooped up foreclosures and other houses relatively cheap.

In Los Angeles County, Trulia said, prices were up 9.3% year-over-year, but just 1.6% in the last three months. In Orange County, prices climbed 6.6% in the last year, and 0.9% in the last three months.

Now that the so-called “rebound effect” is mostly over, price gains in the next couple of years will depend largely on the strength of local job markets, Trulia chief economist Jed Kolko said in the report.

“As prices continue to return to long-term normal levels the rebound effect will continue to fade,” Kolko wrote. “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.”

“Recovery” may not feel that way to homeowners. A separate survey released by mortgage giant Fannie Mae Thursday morning found that Americans were increasingly pessimistic about the housing market.

Just 42% of respondents to a Fannie Mae survey said they thought home prices would climb in the next year, and on average they estimated prices would grow 2.3%. The share of respondents who thought the U.S. economy was on the wrong track increased by 5 percentage points, to 59%.

Fannie Mae chief economist Doug Duncan, though, said the fundamentals of the economy -- particularly six straight months of solid job growth -- boded well for the housing market.

“We have always believed that for the housing recovery to be considered robust, we will need strong and sustained full-time job and income growth,” he said. “If these trends continue, they could lead to some upside in housing in 2015.”

Keep an eye on housing and real estate in Southern California. Follow me on Twitter at @bytimlogan