July Home Price Gains Slow


Home prices continued to increase in July, but the pace appears to be slowing, the S&P CoreLogic Case-Shiller Indices reported yesterday.

The report said year over year, the National Home Price NSA Index posted a 5.1 percent annual gain in July, up from 5.0 percent in June. However, the 10-City Composite posted a 4.2 percent annual increase, down from 4.3 percent; while the 20-City Composite reported a 5.0 percent increase, down from 5.1 percent in June.

Portland, Seattle, and Denver reported the highest year-over-year gains among the 20 cities over each of the past six months. In July, Portland led the way with a 12.4 percent year-over-year price increase, followed by Seattle at 11.2 percent and Denver with a 9.4 percent increase. Nine cities reported greater price increases in the year ending July from a year ago.

Month over month, the National Index posted a month-over-month gain of 0.7 percent in July. The 10-City Composite recorded a 0.5 percent month-over-month increase; the 20-City Composite posted an 0.6 percent increase. After seasonal adjustment, the National Index recorded a 0.4 percent month-over-month increase, the 10-City Composite posted a 0.1 percent decrease and the 20-City Composite remained unchanged. Twelve cities saw prices rise, two cities were unchanged and six cities experienced negative monthly prices changes.

David Blitzer, Managing Director and Chairman of the Index Committee with S&P Dow Jones Indices, noted the National Index is within 0.6 percent of the record high set in July 2006. Seven of the 20 cities have already set record highs. The 10-year, 20-year and National indices have been rising by 5 percent per year over the past 24 months.

“Given that the overall inflation is a bit below 2 percent, the pace is probably sustainable over the long term,” Blitzer said. “The run-up to the financial crisis was marked with both rising home prices and rapid growth in mortgage debt. Currently, outstanding mortgage debt on one-to-four family homes is 12.6 percent below the peak seen in the first quarter of 2008 and up less than 2 percent in the last four quarters. There is no reason to fear that another massive collapse is around the corner.”

“Affordability remains a key challenge, however, as home price appreciation continues to outpace wage growth,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C.

The report said average home prices for the metros within the 10-City and 20-City Composites are back to their winter 2007 levels.