The rate of U.S. home price increases rose in August, reversing a 16-month slowdown.
Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index posted a 3.2% annual gain in August, up from 3.1% in the previous month. The increase ends a 16-month deceleration in price growth. Last month, the 20-City Composite posted a 2% annual gain, unchanged from July and below analysts’ estimates of a 2.1% gain.
“The trend remained intact with a year-over-year price change,” said Philip Murphy, managing director and global head of index governance at S&P Dow Jones Indices, in a press statement.
The results follow weak sales activity data — existing and new home sales declined in September. Last week, the National Association of Realtors said existing home sales fell 2.2% to a seasonally adjusted annual rate of 5.38 million units in September, reversing two straight months of gains. Meanwhile, new home sales dipped 0.7% to a seasonally adjusted annual rate of 701,000 units — meeting expectations and in line with August's sales pace, which was revised down to 706,000 units from the previously reported 713,000 units, according to the U.S. Commerce Department.
Separately, on Tuesday the NAR reported that pending home sales, a leading indicator of the health of the housing market, rose 1.5% in September, increasing for the second straight month. The results beat analysts’ expectations of a 1% increase.
“Even though home prices are rising faster than income, national buying power has increased by 6% because of better interest rates,” said Lawrence Yun, NAR’s chief economist in a press statement. “Furthermore, we’ve seen increased foot traffic as more buyers are evidently eager searching to become homeowners.”
Phoenix led the 20-City Composite for the third straight month, posting the fastest annual home price gain of 6.3%. It was followed by Charlotte, N.C., which posted a 4.5% increase and Tampa, which posted a 4.3% increase.
Meanwhile, Las Vegas which has led the 20-City Composite until it was unseated by Phoenix in June, fell to No. 8 among the cities, posting just a 3.3% annual gain in home prices in August. Amazon’s home state Seattle finally turned positive, posting a 0.7% gain “after three consecutive months of negative yOY price changes.”
“A shift in regional leadership may be underway beneath the headline national index,” said Murphy. “The Southeast region included three of the top four cities. Charlotte, Tampa, and Atlanta all recorded solid YOY performance with price changes of 4.5%, 4.3%, and 4.0%, respectively.”
Amanda Fung is an editor at Yahoo Finance.