Home prices march higher in May, throttling sales

WASHINGTON – Home prices rose rapidly in May, a trend that is thwarting some would-be buyers and pulling down home sales.

The S&P CoreLogic Case-Shiller 20city home price index released Tuesday rose 6.5 percent in May from a year earlier. That’s down slightly from April, but is still more than double the increase workers are seeing in their paychecks.

Mortgage rates also have increased, pushing up monthly costs for home buyers even further. Sales of existing homes have fallen for three straight months after peaking in November. Pending home sales also have declined over the past year.

Sales of newly-built homes, which had been growing at a solid pace this year, tumbled 5.3 percent in June.

Still, home prices in some of the hottest real estate markets continue to move higher: Prices rose 13.6 percent in Seattle from a year earlier, 12.6 percent in Las Vegas and 10.9 percent in San Francisco.

David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said the price increases are broader than in the housing boom and bust cycle that occurred in roughly 15 years ago.

Prices rose a strong 8.5 percent in Denver, 7.6 percent in Los Angeles, 7.3 percent in Phoenix, and 6 percent in Charlotte, North Carolina. Washington, D.C. reported the smallest increase, at 3.1 percent.

Demand for homes is strong, fueled by an unemployment rate near an 18year low and modest wage gains.

Yet few homes are available for sale. In June, the number of houses on the market rose 0.5 percent from a year ago to 1.95 million. That is the first time in three years that the housing inventory has increased, a sign that housing supply may be stabilizing. But buyers are still fighting over a limited number of homes.