WASHINGTON - Home prices in 20 of the largest US cities showed increases of 1.8 percent from June, and in most cases gains for at least four months in a row, according to a leading index.
The SP/Case-Shiller index of home prices in 20 large U.S. cities, released Tuesday, jumped 1.8 percent from June and 12.4 percent from July 2012, data showed.
All 20 cities tracked by the leading measure of U.S. home prices, saw gains over the month, but 15 of the cities saw the pace slow down in comparison to June.
As of July 2013, average home prices across the United States are back to their spring 2004 levels, stated the report.
Over the last 12 months, prices rose 12.4percent as measured by the 20-City Composites. The year-over-year returns show a brighter outlook with 13 cities posting improvement in July versus June values. Las Vegas increased the most from 24.9percent in June to an impressive 27.5percent in July.
"Home prices gains are holding their 12percent annual rate of gain established by the two Composite (10 city and 20 city) indices in April," says David M. Blitzer, Chairman of the Index Committee at SP Dow Jones Indices, in a statement.
"The Southwest continues to lead the housing recovery. Las Vegas home prices are up 27.5percent year-over-year; in California, San Francisco, Los Angeles and San Diego prices are up 24.8percent, 20.8percent and 20.4percent respectively. However, all remain far below their peak levels.
"Since April 2013, all 20 cities are up month to month; however, the monthly rates of price gains have declined. More cities are experiencing slow gains each month than the previous month, suggesting that the rate of increase may have peaked."
All 20 cities continued to show positive monthly gains with Chicago leading at 3.2percent. Seattle, Tampa and Washington were the only three MSAs where returns increased from June to July. Cleveland showed the most weakness with a 0.5percent return in July versus 2.0percent in June.
Looking at the annual rates of change, thirteen cities showed acceleration with San Francisco posting its highest year-over-year return of 24.8percent since March 2001. Atlanta, Boston, Charlotte, Detroit, Miami, Minneapolis and Phoenix were the seven MSAs with lower annual growth rates; the Twin Cities decreased the most with 9.5percent in July compared to 11.5percent in June. Although Detroit posted its 25th consecutive positive year-over-year return, it remains the only city below its January 2000 level
The housing recovery began last year as traditional buyers and deep-pocketed investors rushed into the market looking for bargains amid low prices and historically low mortgage rates. What they found were few homes for sale as the rate of foreclosures plunged. Bidding wars ensued, sending prices swiftly upward and sparking concerns some markets had become overheated.
Lately there have been signs the market has cooled slightly as mortgage rates have risen and more homes have become available for sale in many markets.
"Following the increase in mortgage rates beginning last May, applications for mortgages have dropped, suggesting that rising interest rates are affecting housing. The Fed's announcement last week that QE3 bond buying will continue for the time being may have only a limited, though favorable impact on housing," stated Blitzer.
Gains in home and stock values are contributing to increases in household wealth that are helping bolster consumer spending, the biggest part of the economy. Nonetheless, the appreciation in property values may cool over the rest of the year as mortgage rates close to a two-year high temper demand.
Another home-price gauge also showed improvement. Values climbed 1 percent in July from the prior month after a 0.7 percent increase in June, according to figures from the Federal Housing Finance Agency.
The July HPI (House Price Index) change marks the eighteenth consecutive monthly price increase in the purchase-only, seasonally adjusted index. The previously reported 0.7 percent increase in June remained unchanged.
Sales of previously owned properties rose 1.7 percent in August to a 5.48 million annual rate, the most since February 2007, as buyers rushed to lock in interest rates that were starting to climb from near record-low levels, data from the National Association of Realtors showed last week. The number of existing houses on the market was 2.25 million at the end of August, the fewest for that month since 2002.
"We continue to see long-term fundamental demand in the market driven by the significant shortfall of new single-family and multifamily homes built over the last five years," Stuart Miller, chief executive officer of the Miami-based builder, said in a statement. "While there may be bumps along the road that may impact the short-term pace of the recovery, the long-term outlook for our business remains extremely bright."
Sales rose to $1.6 billion in the three months through August from $1.1 billion a year earlier as the number of homes delivered increased to 4,990 from 3,655. The average selling price increased to $291,000 from $258,000, and orders jumped 14 percent.
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Original headline: Home prices in major US cities show rise
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