Home prices in the nation’s major cities posted the biggest gains in more than a decade this summer, but there’s evidence that price increases are moderating.
The monthly S&P/Case-Shiller home price index, a composite of 20 large metro areas, showed that from June to July house prices increased 1.8 percent. Year over year, prices were up 12.4 percent.
The same trend played out in the Twin Cities metro, where prices rose 1.8 percent from June to July and were up 9.5 percent from last year. But the area was one of seven regions where the annual increases have slowed since earlier in the year.
The report shows that the nation’s housing market continues to mend, though not at the same pace as earlier in the year. For the fourth month in a row, all 20 regions showed that house prices have continued to rise, but in 15 of those regions the month-to-month price gains have begun to slow.
David Blitzer, chairman of the index committee, said that while prices gains are moderating, he’s not concerned about the pace or intensity of that change. “I don’t think there’s anything that would raise any concerns,” he said. “Prices will still go up into the future, but not as fast as recently.”
The Southwest led the housing recovery during July, with home prices in Las Vegas up 27.5 percent year-over-year. In San Francisco, Los Angeles and San Diego, prices were up 24.8 percent, 20.8 percent and 20.4 percent, respectively, but all remain far below their peak levels.
Blitzer said that while price gains remain healthy, a recent decline in mortgage applications suggests that demand is slowing in the wake of a recent increases in interest rates. Rates began rising in May, increasing nearly a full percentage point compared with last year. In recent days, however, rates have fallen slightly on news that the Fed would not immediately repeal its economic stimulus policies.
On Tuesday, Zillow’s Mortgage Rate Ticker showed that the cost of a 30-year fixed-rate mortgage averaged 4.17 percent this week, the lowest in three months. Also Tuesday, the Shenehon Center for Real Estate released its residential real estate price report index for August. That monthly analysis of the 13-county metro area shows that sale prices of traditional listings are getting closer to pre-boom levels, and that foreclosures and short sales continue to fall.
Indeed, fewer homeowners are losing their homes to foreclosure, and that’s reducing the number of heavily discounted properties hitting the market.
CoreLogic said Tuesday that in July, the average foreclosure rate in Twin Cities and across the county declined, with the rate in the Twin Cities well below the national average.
The average foreclosure rate in the metro was 0.94 percent, a decrease of 0.75 percentage point compared with July 2012, when the rate was 1.69 percent. The national foreclosure rate, which was 2.43 percent during July, also declined.
The center’s director, Herb Tousley, said distressed sales represented only 21 percent of home sales during August. That’s compared with 1 percent in August 2005, but less than the 45 percent recorded in August 2011.
The median sale price for a home not affected by foreclosure during August was $228,000, according to the St. Thomas price index, up 1.38 percent from July and just shy of the pre-crash peak of $239,900 in June 2006.