WASHINGTON – U.S. home prices rose by 12.4 percent in July compared with a year ago, the most since February 2006. An increase in sales on a limited supply of available homes drove the gains.
The Standard &Poor’s/Case-Shiller 20-city home price index reported Tuesday improved from June, when it rose by 12.1 percent from a year ago. And all 20 cities posted gains in July from the previous month and compared with a year ago.
Still, the month-over-month price gains shrank in 15 cities in July compared with the previous month, indicating that prices may be peaking. And the month-over-month gains in the 20-city price index have slowed for three straight months.
Buffalo is not included in the index. However, in the Buffalo Niagara region, July sales figures showed that the median sale price for July was $132,750, up by 4.1 percent from last year and the highest for any month in the last three years. Median means half of the homes sold for more than that amount, and half sold for less.
The average sale price in the region was $163,162, up by 7 percent from July 2012 and the highest in the last three years. July figures are the latest available from the Buffalo Niagara Association of Realtors.
Stan Humphries, chief economist for real estate data provider Zillow, said home price should continue to rise but at a slower pace. Mortgage rates have increased by more than a full percentage point since May. And more homes are being built. That should ease supply constraints that have inflated prices in some markets.
“This ongoing moderation is good for the market overall,” Humphries said.
Home prices soared by 27.5 percent in Las Vegas from a year earlier, the largest gain. San Francisco’s 24.8 percent jump was the second-largest and the biggest yearly return for that city since March 2001.
The index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month rolling average. The July figures are the latest available. They are not adjusted for seasonal variations, so the monthly gains reflect more buying activity over the summer.
Since bottoming out in March 2012, home prices have rebounded by about 21 percent. However, they are about 22 percent below the peak reached in July 2006.
The housing market has been recovering over the last year, helped by steady job growth, low mortgage rates and relatively low prices.
Sales of previously occupied homes rose in August to a seasonally adjusted 5.5 million annual pace, according to the National Association of Realtors. That’s a healthy level and the highest in more than six years.
But the Realtors’ group cautioned that the August pace could represent a temporary peak. The gain reflected closings and largely occurred because many buyers rushed to lock in mortgage rates in June and July before they increased further. The Realtors said buyer traffic dropped off noticeably in August, likely reflecting the higher rates.
The average rate on a 30-year fixed mortgage was 4.5 percent last week. That’s near a two-year high. It’s still low by historical standards.