The latest Case-Shiller Home Price Index showed a sustained slowdown in price increases. The National Index gained 6.2 percent in the 12 months ending June 2014 while the 10-City and 20-City composites gained 8.1 percent; all three indices saw their rates slow considerably from May.
“Home price gains continue to ease as they have since last fall,” David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said. “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 percent in June,” Blitzer continued. “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. Bargain basement mortgage rates won’t continue forever; recent improvements in the labor markets and comments from Fed Chair Janet Yellen and other(s) 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, 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 percent. The recovery from the March 2012 lows is 27.8 percent and 28.5 percent for the 10-city and 20-city composites.