Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Business
Classified Sites

The Canadian Press - ONLINE EDITION

US home prices rise 8.1 per cent in June; smallest increase in more than 18 months

This Aug. 14, 2014 photo shows a sign in front of a home for sales in Whittier, Calif. Standard & Poor's releases the S&P/Case-Shiller index of home prices for July on Tuesday, Aug. 26, 2014. (AP Photo/Jae C. Hong)

Enlarge Image

This Aug. 14, 2014 photo shows a sign in front of a home for sales in Whittier, Calif. Standard & Poor's releases the S&P/Case-Shiller index of home prices for July on Tuesday, Aug. 26, 2014. (AP Photo/Jae C. Hong)

WASHINGTON - U.S. home prices increased at a slower pace in June — a cooldown that could continue for several more months.

The Standard & Poor's/Case-Shiller 20-city home price index rose 8.1 per cent in June from 12 months earlier, according to a Tuesday report. That's down from 9.4 per cent a month earlier and the smallest annual gain since December 2012.

Yearly price growth weakened in all 20 cities. Home values in Cleveland nudged up just 0.8 per cent. Las Vegas led with a 15.2 per cent gain. But prices in Las Vegas, Phoenix, Miami and Tampa, Florida, are still at least 33 per cent below their housing bubble peaks of almost a decade ago.

The deceleration should help ease some of the price pressures on would-be buyers. After slumping at the start of 2014, existing-home sales have picked up as price gains have slowed. But buying remains 4.3 per cent below the July 2013 level, according to the National Realtors Association.

Price growth should continue to slow now that the recovery from the Great Recession has entered its sixth year. Many economists project that the Federal Reserve will begin to raise short-term interest rates in 2015 because the economy has strengthened, which could cause mortgage rates to rise from relative lows and make it more expensive to borrow.

"Rising mortgage rates won't send housing into a tailspin, but will further dampen price gains," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.

Even hot markets such as San Francisco — where a two-bedroom condominium can cost more than $1 million — are finding that price growth has slowed. Prices in that city rose 12.9 per cent in June, compared with an annual growth rate of 18.4 per cent in April.

The sharp price gains of the past few years had been part of a natural snap back in response to the devastating housing bust, which triggered the recession at the end of 2007. Still, the fallout from that downturn continues to cast a shadow over the real estate market.

Nearly 35 per cent of homeowners are "effectively underwater" on their mortgages, meaning that they either have less than 20 per cent equity in their homes or could not sell their properties and have enough money left over for a down payment on another home, the online real estate firm Zillow said Tuesday.

One consequence is that fewer homeowners are willing to list their homes for sale. The effect has been disproportionately felt among Generation X. About 19 per cent of this generation — 35- to 49-year olds — owe more on their mortgages than their homes are worth.

That in turn makes it harder for the younger millennial generation to afford homes, said Zillow Chief Economist Stan Humphries.

"Because so many homes are stuck in negative equity or are effectively underwater, the inventory of homes for sale is severely constrained, leading to more competition for those that are available," Humphries said. "And millennials likely don't have the resources to compete with cash offers or engage in bidding wars."

New construction is increasingly catering toward apartment rentals and high-end homes, pricing out many other would-be buyers.

The Commerce Department said Monday that new-home sales fell 2.4 per cent in July to a seasonally adjusted annual rate of 412,000. New-home sales lost much of their upward trajectory toward the end of last year, hurt by modest wage growth and a bump in mortgage rates after the Fed initially signalled a shift in its policies.

g?

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Brandon Sun Business Directory
The First World War at 100

Social Media

Canadian Mortgage Rates