Home Prices Climb at Fastest Pace in Year

Home Prices Climb at Fastest Pace in Year

The News

Home prices in America's 20 largest cities rose faster than expected in June, pushing annual price growth to its quickest pace in a year.

The S&P Cotality Case-Shiller index for the 20 biggest metros climbed 0.24% from May, well above the 0.1% monthly rise economists expected.

That lifted prices 2.1% above where they stood a year earlier — the fastest acceleration in a year, according to the figures reported Tuesday.

The Numbers

Chicago led every metro in the country with a 6.9% annual increase in June, its fourth consecutive month at the top of the list. New York followed at 4.8% and Cleveland at 4.1%.

The declines were concentrated out West. Seattle posted the largest annual drop at 2.0%, followed by Las Vegas at 1.9% and Denver at 1.2%.

MarketWatch reported that home prices nationally are rising at a slow pace with housing inventory still relatively low, while some markets — particularly in the Midwest — are seeing big gains.

Timeline

Prices in the 20-city index fell for three straight months before an unexpected rebound in May.

June's reading extended that rebound and beat forecasts, with the monthly gain more than doubling what was expected.

Reactions

"Seasonal factors continue to support monthly price growth," said Rebecca Kaufman, Associate Director of Commodities at S&P Dow Jones Indices.

"Because June typically falls near the peak of the homebuying season, price appreciation often moderates and market activity cools in the months ahead," Kaufman said.

On the split between regions, she said: "This geographic divide reflects a years-long trend, with housing markets in the Northeast and Midwest regaining strength while many Western and Sunbelt markets soften."

What's Next

Kaufman pointed to borrowing costs as the drag on the market going forward.

"The housing market remains under pressure, with 30-year mortgage rates holding near 6.5% in June," she said.

"As financing costs are kept high for prospective buyers, current homeowners remain reluctant to give up the low mortgage rates secured in prior years."

By her own read, June sits near the peak of the buying season — meaning the price gains that showed up in this report are the kind that typically fade as the year goes on.

More

The Case-Shiller figures track repeat sales of the same homes, and the June reading covers the 20-city composite. The report lands with mortgage rates near 6.5% and inventory still tight — two forces pulling in opposite directions on what buyers pay.

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