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Housing Price Gains Hit The Brakes In June, S&P/Case-Shiller Says

This article is more than 9 years old.

In another indicator that the double-digit housing price gains of 2013 appear to be behind us, price increases continued to slow in June, S&P/Case-Shiller home price data released Tuesday shows.

The National Home Price Index gained just 6.2% in the 12 months ending June 2014, while the 10-City and 20-City Composites gained 8.1%. That's a dramatic shift from the double-digit, year-over-year price increases that had become the norm in the second half of 2013 and the first part of this year. All three indices saw their rates slow significantly from last month, when the year-over-year price changes for 10-City Composite stood at 9.4%, the 20-City at 9.3%, and the National Index at 7.1%.

“Home price gains continue to ease as they have since last fall,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “For the first time since February 2008, all cities showed lower annual rates than the previous month. Other housing indicators – starts, existing home sales and builders’ sentiment – are positive. Taken together, these point to a more normal housing sector."

To be clear, home prices are not dropping, simply rising at a slower rate. Economists like to look at year-over-year data for a better picture of the overall market trend than month-to-month data. The S&P/Case-Shiller Indices measure home prices across the nation as well as in 10 and 20 specific cities. While all cities saw home prices increases in June, every city the indices track recorded slower year-over-year price increases than in the prior month.

"In San Francisco, the pace of price increases halved since late last summer," Blitzer noted. "The Sun Belt cities – Las Vegas, Phoenix, Miami and Tampa – all remain a third or more below their peak prices set almost a decade ago."

Rising mortgage interest rates, which Blitzer expects as soon as Q1 2015 based on comments from Fed Reserve Chair Janet Yellen, could further dampen price increases as they make homes less affordable to potential buyers.

As of June 2014, average U.S. home prices are back to their fall 2004 levels, and about 17% off their mid-summer 2006 peaks.