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Mod­er­ate price gains make home buys eas­ier

USA TODAY Weekend Extra - - AMERICA’S MARKETS - Paul David­son @PDavid­sonusat USA TO­DAY

U.S. home price gains have been mod­er­at­ing. And that’s a good thing.

An­nual jumps in home val­ues had ac­cel­er­ated for 11 con­sec­u­tive months, cheer­ing own­ers but squeez­ing out low- and mod­er­ate-in­come buy­ers.

Since Fe­bru­ary, the year-overyear gain in the S&P CoreLogic Case-Shiller na­tional home price in­dex has been flat or fall­ing for five months in a row. In June, the most re­cent data avail­able, prices were up 5.1% from a year ago.

That still chal­lenges mid­dle-in­come house­holds whose wages haven’t kept up with home price ap­pre­ci­a­tion, says Ralph McLaugh­lin, chief econ­o­mist of real es­tate re­search firm Tru­lia. But the mod­er­at­ing gains at least give such Amer­i­cans a bet­ter chance of af­ford­ing a home.

The hottest mar­kets are still siz­zling, with an­nual price gains in June of 12.6% in Port­land, Ore., 11% in Seat­tle and 9.2% in Den­ver.

But San Fran­cisco has cooled off con­sid­er­ably. Av­er­age prices there were up 6.4% from a year ago, down from 11.1% in Novem­ber and the small­est an­nual in­crease since Au­gust 2012.

Of course, price gains also need to be strong enough to prompt home­own­ers to put their units on the mar­ket. That doesn’t seem to be a prob­lem for now.

“Home prices may be set­tling into a more stable equi­lib­rium,” No­mura econ­o­mist Lewis Alexan­der says. He be­lieves the lat­est S&P re­port for July, out Tues­day, will show a fur­ther mod­est slow­down in home price in­creases.

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