Gains in Home Prices Slow As Sales Start to De­cline

The Bond Buyer - - Market News - — Chip Bar­nett

The S&P Core­L­ogic Case-Shiller U.S. Na­tional Home Price NSA In­dex re­ported a 5.8% an­nual gain in Au­gust, down from 6.0% in July, S&P Dow Jones In­dices re­ported on Tues­day. The data shows that home prices con­tin­ued their rise across the coun­try over the last 12 months.

The an­nual gains fell be­low 6% for the first time in 12 months, the in­dex showed.

“Fol­low­ing re­ports that home sales are flat to down, price gains are be­gin­ning to mod­er­ate,” David Blitzer, manag­ing di­rec­tor at S&PDJI said.

The 10 city com­pos­ite an­nual in­crease fell to 5.1% from 5.5% in July while the 20 city com­pos­ite posted a 5.5% year-overyear gain in Au­gust, down from 5.9% in the pre­vi­ous month.

Among the 20 cities, Las Ve­gas, Seat­tle and San Fran­cisco con­tin­ued to re­port the high­est year-over-year price gains. In Au­gust, Las Ve­gas led the way with a 13.9% year-over-year price in­crease, fol­lowed by San Fran­cisco with a 10.6% in­crease and Seat­tle with a 9.6% gain.

“There are no signs that the cur­rent weak­ness will be­come a re­peat of the cri­sis, how­ever. In 2006, when home prices peaked and then tum­bled, mort­gage de­fault rates bot­tomed out and started a three year surge,” Blitzer said. “To­day, the mort­gage de­fault rates re­ported by the S&P/Ex­pe­rian Con­sumer Credit De­fault In­dices are sta­ble. With­out a col­lapse in hous­ing fi­nance like the one seen 12 years ago, a crash in home prices is un­likely.”

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