USA TODAY International Edition
HOME PRICES UP SHARPLY IN JUNE
But gains are narrowing
Home prices were up strongly in June, but prices aren’t rising as fast as before.
June home prices were up 12.1% from a year earlier and 0.9% from May, when adjusted for seasonal factors, the Standard & Poor’s/ CaseShiller 20- city index showed Tuesday.
That monthly rise was roughly half that seen in March. Meanwhile, the national index posted a 2.3% seasonally adjusted jump in the second quarter from the first. That was sharply lower than the 3.8% rise in the first quarter from last year’s fourth. “We’re definitely seeing slowing,” says Stan Humphries of real estate website Zillow.
Its data also show home values rising more slowly: up 0.4% in July from June. They rose 0.8% in June from May
With 30- year mortgage rates averaging almost 4.6%, “Home buyers may be discouraged, and sharp increases may be dampened,” says David Blitzer, chairman of S& P’s index committee.
Prices are still rising plenty fast. The June monthly gain is equal to an annualized rate of around 11%. Gains could slow much more and still be healthy, says Jed Kolko, chief economist for real estate website Trulia.
“There isn’t strong evidence yet of a slowdown,” says Robert Shiller, cocreator of the index. He says the housing recovery still has strong momentum. Some markets have seen a shift, however.
Detroit prices fell 1.4% in June from May, following a 2.4% gain in May from April, Case- Shiller seasonally adjusted numbers show.
Seattle posted a 0.9% jump in June from May, down from a 1.4% monthly gain in May.
Minneapolis prices fell 1.1% on a seasonally adjusted basis in June from May. They fell 0.4% in May from April. “The market is still strong, but it’s slowed,” says Minneapolis ReMax Realtor Jason Stockwell. More homes are taking longer to sell, he says.
Redfin’s data show price reductions in August occurring on almost 15% of active listings across 22 major markets nationwide. That’s up from about 10% in February and March.
Nationwide, asking prices were up 3.3%, on a seasonally adjusted basis, in May, June and July from the previous three months, Trulia says. That’s down from the 4.2% jump in the three months ended in January vs. the three months ended in April.
More homes for sale is part of the reason. Nationwide, the for- sale home inventory was down 5.2% in July from a year ago. That was an improvement from January when it was down 16% year over year, Realtor. com says.
Home values will rise 4.8% from July of this year to next July, Zillow predicts. That’s slower than in the past year but still far stronger than the historical norm of 3.5% a year.
Any slowdown in price gains “will not be dramatic,” says Ed Stansfield of Capital Economics. Smaller price gains would reduce the risk of another housing bubble, he adds.