Home prices in 20 U.S. cities rose at a slower pace in the year ended in June as declining affordability and weak wage gains kept appreciation in check.
The S&P/Case-Shiller index of property values increased 8.1 percent from June 2013, the smallest 12-month gain since January 2013, the group reported today in New York.
Price gains are slowing as more houses are coming up for sale and investors retreat to the sidelines. That, combined with an improving job market, could put homeownership within reach of more Americans grappling with disappointing wage growth and strict lending rules.
“We’re seeing more inventories coming on line, which is putting downward pressure on prices,” Anika Khan, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “In general, we have seen prices rise at a faster pace than the fundamentals would call for. There’s a normalization happening.”
The median forecast of 27 economists surveyed by Bloomberg projected an 8.3 percent gain in the 12 months ended in June. Estimates ranged from 7.7 percent to 9 percent.
Another report confirmed price gains are decelerating. Property values rose 0.8 percent in the second quarter from the previous three months after increasing 1.3 percent at the start of the year, according to figures from the Federal Housing Finance Agency.