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Home Price Growth Beginning To Slow Down, Says S&P/Case-Shiller
Morgan Brennan / Forbes / August 27, 2013
Home prices continued their upward march in June, if at a slightly slower pace.
U.S single-family home prices in 20 metropolitan areas rose a seasonally-adjusted 0.9% in June from a month earlier, according to the S&P/Case-Shiller Home Price Index, after rising 1% in May.
The gain puts home prices 12.1% higher than they were a year ago, as all 20 metro areas welcomed price increases on both a monthly and annual basis, led by Las Vegas (24.9%) and San Francisco (24.5%). S&P/ Case-Shiller’s 20-city composite index also posted a 7.1% increase in the second quarter and a 10.1% increase over the past four quarters.
Yet the biggest takeaway from the new report is the fact that the pace of home price growth is showing signs of slowing down, as rising mortgage rates begin to weigh on home sales. Thirteen of the 20 cities saw their returns weaken on a monthly basis.
“Overall, the report shows that housing prices are rising but the pace may be slowing,” says David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. “As we are in the middle of a seasonal buying period, we should expect to see the most gains. With interest rates rising to almost 4.6%, home buyers may be discouraged and sharp increases may be dampened.”
The spring-summer buying season, comprised of April, May, June and July, typically accounts for more than 40% of all housing transactions.
Mortgage rates have surged more than a full percentage point since early May. Interest on the 30-year fixed rate mortgage averaged 4.58% in the week ending August 22, according to Freddie Mac. Interest rates were as low as 3.35% in the first week of May. Rates have spiked on investor speculation that the Federal Reserve will begin tapering its $85 billion-per-month bond-buying program known as QE3 as soon as September.