Isabel Smith

Posted at 05:31 AM ET, 04/25/2013   Apr 25, 2013 09:31 AM EDT

Report: Home prices rise at slower pace in first quarter

Home prices that have been rising over the last 16 months are finally starting to show a slowdown, according to the latest quarterly report by real estate firm Zillow.

Prices rose in most of the top 30 metropolitan areas surveyed by Zillow, but they rose at a rate of 0.5 percent, compared to 2.1 percent at the end of 2012. This is the second consecutive quarter in which the nation's growth rate has slowed.

Home prices in the Washington area are increasing faster than the national rate, but they are also beginning to lose steam. Prices rose at a rate of 1.2 percent in the first quarter, compared to 2.3 percent in the fourth quarter of 2012.

"While home values are still rising, they're not rising as fast as they have been previously," said Stan Humphries, Zillow's chief economist.

The slowdown doesn't come as a surprise, Humphries said, because it means that the country's rate of growth is making its way back to historical norms. Home values usually increased at an annual rate of 3 percent when the market was healthy, according to Zillow. The company forecasts a growth rate of 3.2 percent through March 2014.

Phoenix, California's Bay Area and Miami, markets that suffered the worst of the housing crisis, continued to have double-digit growth in home prices. New York, Chicago and St. Louis were among the cities that saw a drop in value.

The shortage of inventory, which also drove down existing-home sales, has contributed to high prices in these markets, Humphries said.

Rents across the country grew at a rate of 0.9 percent in the first quarter, and were up 4.9 percent from a year ago. For Washington, the increase was 0.9 percent this quarter and 3.8 percent from a year ago.

Rents in the area still remain much higher than the national average. The average rent was $2,081 in Washington, compared to $1,290 nationally, according to Zillow's rent index.

By Amrita Jayakumar | 05:31 AM ET, 04/25/2013