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Case-Shiller: Home prices continue to slow as housing stalls

Year-over-year returns down across the board

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Home price growth showed a sustained slowdown in price increases, according to the June S&P/Case-Shiller Home Price Indices.

The National Index gained 6.2% in the 12 months ending June 2014 while the 10-City and 20-City Composites gained 8.1%; all three indices saw their rates slow considerably from last month.

This is more positive that the recent Federal Housing Finance Agency data that shows that U.S. house prices rose just 0.8% in the second quarter of 2014, according to its purchase-only, seasonally adjusted House Price Index. The FHFA reports data from home sales where the mortgage is sold to Fannie Mae or Freddie Mac.

Nonetheless, it's not all rosy for Case-Shiller, as every city saw its year-over-year return worsen.

 “Today’s Case-Shiller data continues the national slowing trend we’ve been seeing for much of the past few months. But a broader look at more recent data shows that local dynamics, and not larger national trends, are once again determining individual market performance,” said Zillow Chief Economist Stan Humphries. “Different markets boast sometimes dramatically different fundamentals, including differences in the balance between buyers and sellers, varying levels of inventory, faster or slower paces of appreciation and wider or narrower gaps between asking prices and selling prices. Some markets are gaining momentum, others are very hot but beginning to cool and still more are somewhere in between. Consumers looking at these national numbers should not assume they apply evenly to their local market.”

The National Index, now being published monthly, gained 0.9% in June. The 10- and 20-City Composites increased 1.0%. New York led the cities with a return of 1.6% and recorded its largest increase since June 2013. Chicago, Detroit and Las Vegas followed at +1.4%. Las Vegas posted its largest monthly gain since last summer.

“Home price gains continue to ease as they have since last fall,” says David 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.

“The monthly National Index rose 0.9% in June. While all 20 cities saw higher home prices over the last 12 months, all experienced slower gains. In San Francisco, the pace of price increases halved since late last summer. 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,” Blitzer said.

“Bargain basement mortgage rates won’t continue forever; recent improvements in the labor markets and comments from Fed chair Janet Yellen and others hint that interest rates could rise as soon as the first quarter of 2015. Rising mortgage rates won’t send housing into a tailspin, but will further dampen price gains.”

As of June 2014, average home prices across the United States are back to their autumn 2004 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 17%. The recovery from the March 2012 lows is 27.8% and 28.5% for the 10-City and 20-City Composites.

All 20 cities saw their year-over-year rates weaken in June. For the second consecutive month, San Francisco saw its rate decelerate by almost three percentage points – from 18.4% in April to 12.9% in June. Phoenix showed its smallest year-over-year gain of 6.9% since March 2012. Cleveland showed a marginal increase of 0.8% over the last 12 months while Las Vegas led with a gain of 15.2%.

All cities reported price increases for the third consecutive month; it would have been a fourth had New York not declined 0.4% in March. San Francisco posted its eighth consecutive price increase but showed its smallest gain of 0.3% since February. Five cities – Detroit, Las Vegas, New York, Phoenix and San Diego – posted larger gains in June than in May. Dallas and Denver continue to set new peaks while Detroit remains the only city below its January 2000 value.

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