Home prices continued to rise at a slower pace in July. Prices have been increasing at a slower rate since April.
Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index reported a 6% annual gain in July, down from 6.2% in the previous month. The 20-City Composite posted a 5.9%, substantially below analysts’ expectation of 6.2% and down from 6.4% in June.
“Rising homes prices are beginning to catch up with housing,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, in a press statement.“The slowing is widespread: 15 of 20 cities saw smaller monthly increases in July 2018 than in July 2017.”
He noted that sales of existing single family homes have dropped each month for the past six months and are now at the level of July 2016. “High prices are beginning to bite into sales. Given the fact mortgage rates up and affordability going down market is being squeezed a bit,” said Blitzer on Yahoo Finance’s Market Movers.
Blitzer said home prices have rebound sharply from the lows of 2012. but the rising home prices can’t sustain this pace unless we see incomes and wages go up at the same rate and “we’re certainly not seeing that happening.”
The results are in-line with other recent home price reports. Real estate brokerage Redfin reported on Monday that U.S. home-sale prices increased 4.7% in August compared to a year ago. The price growth rate has been dropping for six consecutive months and has not been this low since August 2014, Redfin said.
“This cooling in house price appreciation has occurred during a time in which many other house price measures also have softened,” said JPMorgan in a research note.
“The inevitable softening of the housing market appears to be upon us, and today’s Case Shiller Home Price Index numbers are another sign of moderation,” said Cheryl Young, senior economist at Trulia, in a press statement.
Signs that the housing market was starting to slow down surfaced last month. After four months of decline, existing home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, in August did not change from July and remained at a seasonally adjusted rate of 5.34 million, according to the National Association of Realtors. Sales are now down 1.5% from a year ago.
Vegas leads in price gains, but still below peak
For the second consecutive month, Las Vegas edged out Seattle as the city posting the largest annual price increases of all the 20 cities. Vegas recorded a 13.7% annual gain, while Seattle posted a 12.1% gain, according to S&P Corelogic Case-Shiller.
Despite the strong results, Vegas is among the eight cities where prices have not reached record levels. Miami, Phoenix, Tampa, New York, Washington DC, Chicago and Detroit join Vegas. “Since home prices bottomed in 2012, 12 of the 20 cities tracked by the S&P Corelogic Case-Shiller indices have reached new highs before adjusting for inflation,” said Blitzer.
Amanda Fung is an editor at Yahoo Finance.