Slight Cooling in Housing a Good Thing:

U.S. housing prices rose 8.5% through August even as higher mortgage rates hurt demand, according to a Federal Housing Finance Agency report.

Though home prices continue to rise, real estate research from Zillow (Z) finds evidence the housing market is cooling. The pace of home value appreciation slowed in the third quarter to 1.2%, about half the pace of the second quarter of this year. And as Stan Humphries, chief economist at Zillow, tells The Daily Ticker in the above video -- that’s “a pretty good thing.”

Why?

“We have been wanting to see a little bit of moderation in the pace of home value gains because they’ve been rising at a very fast pace off the bottom. And in order to get back to a normal pace we need to start to see things moderate,” he tells us. “The normal pace in the housing market looks more like 3.5% [growth in values] a year, so in the past several months we’ve been rising at almost twice that pace.”
In other words, you want the housing recovery to be sustainable so in some cases (like now) a slowdown is good.

Seven Year Low in Foreclosures:

The number of U.S. homes set on the path to foreclosure slid to a seven-year low in the third quarter, reflecting a gradually improving housing market and fewer homeowners falling behind on mortgage payments.

Lenders initiated foreclosure action on 174,366 homes in the July-September period, the lowest level since the second quarter of 2006, foreclosure listing firm RealtyTrac said Thursday.

Foreclosure starts declined 13 percent from the previous quarter and were down 39 percent from the third quarter last year, the firm said. Foreclosures peaked in 2010 at 1.05 million units and have been declining ever since.

The national slowdown in foreclosure starts comes as the U.S. housing market continues to recover from a deep slump, a rebound driven by rising home prices, steady job growth and fewer troubled loans dating back to the housing bubble days. Fewer homes entering the foreclosure pipeline should translate into fewer properties that eventually end up lost to foreclosure.