Home-price gains cool off
Although prices are up in the latest S&P/Case-Shiller Home Price Index, momentum may be slowing.
Post begins below videoHome prices across the U.S. increased in the year ended in February, although the momentum is easing, according to a report released Tuesday.
The Standard & Poor's/Case-Shiller home-price index covering 10 major U.S. cities increased 13.1 percent in the year ended in February. Case-Shiller's 20-city price index advanced 12.9 percent, less than the 13.1 percent expected by economists and down from 13.4 percent for all of 2013.
On an unadjusted basis, both the 10-city and 20-city indexes were unchanged in February over January. Seasonally adjusted, the 10-city index was up 0.9 percent, while the 20-city measure increased 0.8 percent.
Rising home prices help the economy by promoting more home building and increasing wealth for existing homeowners. But the surge in prices seen for more than a year is easing.
"The annual rates cooled the most we've seen in some time," said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. "Moreover, home prices nationally have not made it back to 2005. Mortgage interest rates, which jumped in May last year and are steady since then, are blamed by some analysts for the weakness. Others cite difficulties in qualifying for loans and concerns about consumer confidence. The result is less demand and fewer homes being built."
The Case-Shiller data follow a mixed performance by other housing indicators. According to the Commerce Department, sales of new homes, which account for a much smaller portion of the overall market than existing homes, tumbled 14.5 percent in March to their lowest level since July.
On Monday the National Association of Realtors said that its seasonally adjusted index of pending sales of existing homes rose 3.4 percent in March from February, a larger increase than economists expected. But that index is still below its 2001 benchmark level, and earlier the Realtors group said its gauge of sales closures for existing homes fell in March for the third consecutive month.
Regionally, Tuesday's Case-Shiller report said, "Denver and Dallas remain the only cities which have reached new postcrisis price peaks. The Northeast with New York, Washington and Boston are seeing some of the slowest year-over-year gains."
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