Home Prices Slow Their Climb in June; Higher Rates a Factor

Home Prices Slow Their Climb in June; Higher Rates a FactorHome prices climbed 12. 1 percent in June compared to a year ago, according to an update Tuesday from the widely-cited S&P/Case-Shiller index that tracks the real estate market in 20 of the biggest U.S. cities.
All 20 cities posted gains on a monthly and annual basis. But only six cities recorded prices rising faster this month than last, compared to ten in May.
That indicates a possible slowdown in rising home prices as higher mortgage rates may have started to weigh heavily on the market at the beginning of summer.
As of June 2013, average home prices across the United States are back to their spring 2004 levels.
Measured from their June/July 2006 peaks, the peak-to-current decline is about 23 percent. The recovery from the March 2012 lows is 19 percent for the 20 cities.
“Overall, the report shows that housing prices are rising but the pace may be slowing,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices.
Thirteen out of twenty cities saw home prices weaken from May to June.
“As we are in the middle of a seasonal buying period, we should expect to see the most gains,” Blitzer said. “With interest rates rising to almost 4.6 percent, home buyers may be discouraged and sharp increases may be dampened.”
All 20 cities showed positive monthly returns for at least the third consecutive month.
Six cities – Charlotte, Cleveland, Las Vegas, Minneapolis, New York and Tampa – showed acceleration. Atlanta took the lead with a return of 3.4 percent — as San Francisco dropped to +2.7 percent in June from +4.3 percent in May. New York posted a gain of 2.1 percent, its highest since July 2002.
Year-over-year, Las Vegas and San Francisco were the only two cities to post gains of over 20 percent; Atlanta, Detroit and Phoenix decreased to +19.0 percent, +16.4 percent and +19.8 percent, respectively.
Seven cities – Dallas, Las Vegas, Los Angeles, Miami, New York, San Diego and Tampa – showed improvement in their annual rates. Out of the 13 remaining cities, Detroit showed the most deceleration, but it still posted an impressive 16.4 percent increase.
Despite gaining 35.6 percent from its post-recession low in April 2011, Detroit remains the only city below its January 2000 level.
Home Prices Slow Their Climb in June; Higher Rates a Factor

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