U.S. Home Prices Rise Just 0.2% in October

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Home Prices
Chuck Burton/AP

WASHINGTON -- A measure of U.S. home prices rose only modestly in October, adding to signs that prices have stabilized after big gains earlier this year.

Real estate data provider CoreLogic said Tuesday that prices increased 0.2 percent in October from September. That's up from a 0.1 percent gain in September. But it is down sharply from a 0.9 percent increase in August.

One reason for the slowdown is that the figures aren't adjusted for seasonal patterns. Prices usually decline in the fall and winter, when sales slow.

Still, big gains in previous months, along with higher mortgage rates, may be pricing some buyers out of the market.

Home prices have risen 12.5 percent from a year ago. The increase could encourage more sellers to put their homes on the market, easing a shortage of homes for sale.

Only 1.88 million homes were for sale at the end of October, down 2.1 percent from the previous month and the fewest since March.

The shortage of inventory has slowed sales. %VIRTUAL-article-sponsoredlinks%Home re-sales fell in October for a second straight month to a seasonally adjusted annual pace of 5.12 million, the lowest since June, according to the National Association of Realtors. That pace is still 6 percent higher than it was a year earlier. But it's below the roughly 5.5 million sold each year in healthier markets.

Some sales were delayed in October due to the 16-day partial government shutdown, the Realtors' group said. The shutdown prevented the IRS from verifying incomes, a critical part of the mortgage-approval process. Those sales may have been pushed into November or December.

But a measure of signed contracts to buy homes fell for a fifth straight month in October. That points to weaker final sales in the coming months. Final sales typically occur one to two months after contracts are signed.

According to CoreLogic (CLGX), prices rose in October from the previous year in all states except New Mexico. The biggest gains were in Nevada (25.9 percent), California (22.4 percent), Georgia (14.2 percent), Michigan (14.1 percent) and Arizona (14 percent).

Ninety-six of the 100 largest metro areas reported price gains from the previous year. That's down from September, when all 100 cities reported gains.

The biggest increase was in Riverside, Calif., with 24.1 percent, followed by Los Angeles (22.1 percent), Atlanta (16.4 percent), Phoenix (15.9 percent) and Chicago (12.3 percent).

Home prices are still about 17 percent below the peak reached in April 2006, according to CoreLogic.

6 Popular Tax Breaks That Could Disappear in 2014
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U.S. Home Prices Rise Just 0.2% in October
Usually, if borrowers have part of their debt written off or forgiven, they have to treat that amount as taxable income. But in the aftermath of the housing market's implosion, homeowners who defaulted on their mortgages and had their bank write off or forgive part or all of their loans weren't required to claim the forgiven amount as income. The Mortgage Forgiveness Debt Relief Act of 2007, which created this provision, has been extended before, but now, with home prices recovering somewhat, the incentive to preserve this provision is starting to fade. That makes it more likely that the mortgage-debt forgiveness provisions might not get renewed for 2014.
Federal tax law has allowed taxpayers to deduct state and local income taxes for years, but for the 57 million people who live in states that don't charge income tax, those provisions didn't provide any relief. That changed in 2004, when lawmakers allowed taxpayers to choose instead to take a similar deduction for sales taxes. The provision, which was originally slated to expire at the end of 2007,  has been repeatedly extended by Congress. Over the years, it has provided $16.4 billion in deductions to affected taxpayers.
Teachers from kindergarten to high school are allowed to deduct up to $250 for money they spend buying supplies for their classrooms. This deduction's available even to those who don't itemize, making it more valuable than most deductions. According to figures from The Tax Institute at H&R Block, more than 3.6 million teachers took advantage of this provision in 2010 to deduct $915 million in expenses. This deduction has been extended regularly ever since its initially scheduled expiration in 2005, so, even though it's on the chopping block again, it's a pretty good bet that lawmakers will let the tax break survive into 2014.
Under current law, employers may allow their employees to have pre-tax money taken from their paychecks and directed to paying for parking expenses or the cost of public transportation. But for years, the maximum amounts for public-transportation expenses were only about half what car-commuters could take for parking. In 2009, lawmakers equalized those amounts. In 2013, that meant that $245 a month worth of commuting-related expenses could be paid for tax-free, whether that meant a transit pass or parking fees. But after a last-minute battle at the beginning of this year to extend the benefit retroactively to 2012, transit-riders are once again facing the expiration of the provision. In June, three lawmakers introduced the Commuter Parity Act to make the provision permanent, but the bipartisan proposal is stuck in limbo in the House Ways and Means Committee.
These provisions allow certain taxpayers to deduct between $2,000 and $4,000 of qualified educational costs. This provision was also retroactively reinstated for 2012 at the beginning of this year. The difference, though, is that other tax breaks also exist for educational expenses, including the Lifetime Learning Credit and the American Opportunity Credit. (You have to pick either the tuition and fees deduction, or one of the two education credits. You're not allowed to double-dip.) Those tax credits makes it less crucial to extend the tuition deduction, although it's still a better deal for many people: The Tax Institute at H&R Block says that 2 million taxpayers used it to write off $4.36 billion in expenses in 2010.
Since 2006, taxpayers could claim a credit on certain expenses for remodeling their homes to make them more energy efficient. Currently, the maximum lifetime credit amount is $500, but amounts were higher in the past, and more than 43.5 million taxpayers have claimed an average of more than $765 using the credit.
Congress commonly waits until late in the year to extend expiring tax provisions like these, as well as others not mentioned above, such as the exemption for charitable IRA distributions, deductions for mortgage insurance premiums, and the higher immediate write-off amounts for small-business equipment purchases.

Lawmakers often use what's known as a tax-extenders bill to pass all the extensions in a single package. Earlier this month, WOTC Coalition President Paul Suplizio said that a seemingly unrelated Medicare-payments bill was probably the first step toward a year-end tax extenders bill that would cover expiring tax breaks like these.

And, just as millions of Americans procrastinate until April 15 to file their taxes, we can expect lawmakers to wait until Dec. 31 -- or beyond -- to decide the fate of these tax breaks.
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