WASHINGTON (10/30/13)--August home prices in the U.S. rose at their fastest annual pace since February 2006, according to the Standard & Poor's/Case-Shiller 20-city home price index.
All 20 cities in the index showed annual gains, ranging from 3.6% in New York to 29.2% in Las Vegas (Moody's Economy.com Oct. 29).
But while the measurement showed its greatest annual nationwide increase in more than seven years, rising prices have started to abate in recent months, adding to concerns that housing demand is slowing, amid a weak job market and rising mortgage rates. The month-to-month index increased by just 1.3% in August, down from a 1.8% increase in July, with 16 out of 20 cities in the measurement reporting slower growth in August (The Associated Press Oct. 29). In September, home price increases by city ranged from 2.9% in Las Vegas to 0.5% in Seattle.
Houses have appreciated in value across the country in recent years, as the percentage of total sales that can be classified as distress sales has declined since the start of the global financial crisis in 2008. Foreclosure inventories and all stages of the foreclosure process have been steadily waning since then. Fewer households are defaulting on mortgage payments, tightening the supply of homes in a market that has been saturated with desperate sellers over the past half-decade (AP and Moody's Economy.com Oct. 29).
A weak job market and mortgage rates creeping upwards are, however, potentially dampening the prospects of robust future demand for homes.
The Federal Housing Finance Agency reported on Tuesday that contract mortgage interest rates increased by 0.11% from August to September, according to an index of new mortgage contracts. The composite contract rate, according to the FHFA was 4.36%, up from 4.25% in August.