U.S. home price gains cool

A key index rises 12.9% in February, the smallest 12-month increase since August.

By Andrew Khouri

Home price gains slowed nationwide in February, another sign that the market cooled before the spring home buying season, according to a closely watched index.

The S&P/Case-Shiller index of 20 large U.S. metropolitan areas, released Tuesday, was f lat from January. The gauge was up 12.9% from February 2013, the smallest 12-month increase since August. Only five cities saw yearover-year price gains quicken.

“The annual rates cooled the most we’ve seen in some time,” said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices.

Thirteen cities’ prices fell in February from January’s level, including Las Vegas. The desert city hadn’t had prices drop from one month to the next in nearly two years.

Buyers nationwide have struggled to afford a home after prices and interest rates rose last year. Econo- mists say severe weather at the beginning of this year also helped freeze the market in much of the country.

In the Los Angeles metro area, which includes Orange County, prices rose 0.5% from January. Compared with a year earlier, prices climbed at a robust 18.2%, although that was the slowest year-over-year pace since March of last year.

The Case-Shiller index, created by economists Karl E. Case and Robert J. Shiller, is widely considered the most reliable read on home values. The housing index compares the latest sales of detached houses with previous sales, and accounts for factors such as remodeling that might affect a house’s sale price over time.

The index, however, trails other indicators and is not seasonally adjusted. On Monday, the National Assn. of Realtors reported buyers signed more contracts for previously owned homes in March than a month earlier. The increase, adjusted for seasonal swings, was the first in nine months.

Still, other recent data, including new-home sales, construction and closed transactions for previously owned homes, have been lackluster.

“Five years into the recovery from the recession, the economy will need to look to gains in consumer spending and business investment more than housing,” Blitzer said.