Home prices rose 1.8% in July, down from 2.2% in June, according to the Case-Shiller report. After seasonal adjustments, prices were up 0.6% in July, the lowest gain since September.
It looks like higher mortgage rates are hitting the housing market, said David Blitzer, index committee chairman at S&P Dow Jones Indices. Among the 20 cities tracked by S&P/Case-Shiller, 15 saw slower monthly price growth in July. Elsewhere Tuesday, the Federal Housing Finance Agency, which regulates mortgage buyers Fannie Mae and Freddie Mac, reported that home prices rose a seasonally adjusted 1% in July, and were up 8.8% from the year-earlier period.
Mortgage rates started rising in early May on speculation that the Federal Reserve could start cutting its large-scale asset purchases that have helped keep home loans relatively cheap. The Fed announced last week that it is not going to start tapering these purchases yet, but that news is likely to have only a temporary impact on housing, Blitzer said.
“The rate of increase may have peaked,” he said.
A low number of homes for sale coupled with lots of pent-up demand from buyers have led to upward pressure on prices. Indeed, on a year-over-year basis, home prices grew 12.4% in July, the fastest annual pace since 2006. Still, home prices in July were about 21% below a 2006 peak.
“The latest rise in the annual rate of house price inflation in July may be the most eye-catching part of today’s Case-Shiller house price report. But the real story is a welcome slowdown in the underlying rate of house price gains in recent months,” Capital Economics analysts wrote in a research note.
According to details of the Case-Shiller report, Las Vegas saw the largest annual home-price growth in July at 28%, followed by San Francisco at 25%. New York had the lowest annual home-price growth at 3.5%.
Looking broadly at the housing market, recent reports have indicated that the rebound is slowing. Unemployment remains high and many can’t afford to establish their own household, meaning that pent-up demand may take a long time to translate into actual purchases. First-time buyers are having a particularly tough time, and make up a small share of existing-home sales.
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