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US Home Prices Still Rising, But Pace Is Slowing

Published by: Mike Goldman on 4th Nov 2014 | View all blogs by Mike Goldman
US Home Prices Still Rising, But Pace Is Slowing
 
Home prices continued to rise in August, according to a report issued Tuesday by Standard & Poor's and Case-Shiller, but that price growth slowed as the group's index posted the smallest year-over-year gain in almost two years.  The S&P/Case-Shiller Index, which gauges home values in the nation's 20 largest cities, climbed 5.6 percent in August as compared to a year earlier.  That's considerably below the 6.7 percent increase from July 2013 to this July.  The group's National Home Price Index, meanwhile, rose 5.1 percent year-over-year in August, compared to a 5.1 percent uptick in July.  Tuesday's report clearly shows that home price growth is slowing after prices jumped by double digits through most of last year and the early part of 2014.

Economists almost universally welcomed Tuesday's report, noting that slower, steadier price growth is just what the housing sector needs as it continues to recover from the recession nearly seven years after the market collapsed.  The slowdown in price growth is particularly notable in the nation's metropolitan communities, as evidenced by the larger decline in the S&P/Case-Shiller 20-city index.  These markets have seen a lot of investor activity over the last few years as markets worked through foreclosures and other distressed properties.  Prices growth has remained on the moderate side in smaller communities, where a far smaller sampling of distressed homes has failed to draw interest of investors looking to cash in on the recovery.

Of the 20 cities tracked by the S&P/Case-Shiller index, 19 saw year-over-year price growth drop off in August, with Cleveland, Ohio the only exception.  The greatest decline was seen in Las Vegas, where a 12.8 percent year-over-year price jump in July fell to 10.1 percent in August.  Miami, meanwhile, overtook Las Vegas for the city with the biggest year-over-year price growth in August, at 10.5 percent.  Also notable, San Francisco posted a 9 percent year-over-year price increase in August, marking the first time since November 2012 that that city's price growth failed to reach double digits.

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