From the WSJ:
U.S. home prices rose by their fastest pace in more than seven years during July, according to an index released Tuesday, though more recent data suggest price gains could soon moderate.
Prices in 20 major U.S. cities increased 12.4% in July compared to the same month last year, according to the Standard & Poor’s/Case-Shiller index.
Home-price inflation accelerated sharply over the past year as more buyers have chased a shrinking supply of homes for sale. Fewer properties are selling out of foreclosure and until May, mortgage rates had hovered near record lows, letting buyers qualify for slightly more debt without increasing their monthly payment much.
Rising mortgage rates, which are up nearly a percentage point since May, could ultimately test buyers’ willingness to pay more. That may have accelerated some purchases from buyers who had initially planned to buy later this year, but it has made other buyers more hesitant.
Tuesday’s report hinted at a possible slowdown in the rate at which prices are going up. While all 20 cities tracked by the Case-Shiller index gained in July, the pace at which prices rose slowed in 15 cities.
“The slowing in monthly gains is not a nail in the recovery’s coffin,” said Bill Banfield, director of capital markets at Quicken Loans. “In fact it shows a normalizing of the market and that this growth can be sustained.”
Home prices rose 1.8% in July from June. While that was slower than the month-over-month increases in the previous three months, prices tend to rise fastest in the spring, and they typically peak in June. July’s gain was still the largest for that month since the Case-Shiller index began its count in 2000.