Data through June 2014, released by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices show a sustained slowdown in price increases. The National Index gained 6.2 percent in the 12 months ending June 2014 while the 10-City and 20-City Composites gained 8.1 percent; all three indices saw their rates slow considerably from last month. Every city saw its year-over-year return worsen.
The National Index, now being published monthly, gained 0.9 percent in June. The 10- and 20-City Composites increased 1.0 percent. New York led the cities with a return of 1.6 percent and recorded its largest increase since June 2013. Chicago, Detroit and Las Vegas followed at +1.4 percent. Las Vegas posted its largest monthly gain since last summer.
The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 6.2 percent annual gain in June 2014. The 10- and 20-City Composites posted year-over-year increases of 8.1 percent.
“Home price gains continue to ease as they have since last fall,” said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. “For the first time since February 2008, all cities showed lower annual rates than the previous month. Other housing indicators – starts, existing home sales and builders’ sentiment – are positive. Taken together, these point to a more normal housing sector."
Quicken Loans Vice President Bill Banfield said, “The gains in home prices are starting to slow but remain directionally positive. Other housing data on starts and existing home sales are upbeat and should underpin stability on the housing front. Look for prices to remain flat or even decrease a bit in the coming months, as inventory continues to catch up with demand and interest rates could rise from the cozy levels we’ve seen this year.”
“The monthly National Index rose 0.9 percent in June. While all 20 cities saw higher home prices over the last 12 months, all experienced slower gains," said Blitzer. "In San Francisco, the pace of price increases halved since late last summer. The Sun Belt cities – Las Vegas, Phoenix, Miami and Tampa – all remain a third or more below their peak prices set almost a decade ago. Bargain basement mortgage rates won’t continue forever; recent improvements in the labor markets and comments from Fed chair Janet Yellen and others hint that interest rates could rise as soon as the first quarter of 2015. Rising mortgage rates won’t send housing into a tailspin, but will further dampen price gains.”
All 20 cities saw their year-over-year rates weaken in June. For the second consecutive month, San Francisco saw its rate decelerate by almost three percentage points – from 18.4 percent in April to 12.9 percent in June. Phoenix showed its smallest year-over-year gain of 6.9 percent since March 2012. Cleveland showed a marginal increase of 0.8 percent over the last 12 months while Las Vegas led with a gain of 15.2 percent.
All cities reported price increases for the third consecutive month; it would have been a fourth had New York not declined 0.4 percent in March. San Francisco posted its eighth consecutive price increase but showed its smallest gain of 0.3 percent since February. Five cities – Detroit, Las Vegas, New York, Phoenix and San Diego – posted larger gains in June than in May. Dallas and Denver continue to set new peaks while Detroit remains the only city below its January 2000 value.