WASHINGTON – U.S. home prices rose more slowly in September than in August, a sign that weaker sales are preventing the kinds of sharp price gains that occurred earlier this year.
The Standard & Poor’s/Case-Shiller 20-city home price index rose 0.7 per cent from August to September, down from a 1.3 per cent gain from July to August. That figure isn’t adjusted for seasonal variations, so the change reflects, in part, slower buying in late summer and fall.
Still, other recent reports show that previous gains in home prices, higher mortgage rates and the partial government shutdown last month have weighed on the housing market. Home resales and signed contracts to buy homes both fell in October.
“Other data suggest a market beginning to shift to slower growth rather than one about to accelerate,” said David Blitzer, chairman of the S&P Dow Jones index committee.
The Case-Shiller index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The September figures are the latest available.
Monthly price gains slowed in 19 of the 20 cities tracked by Case-Shiller index. Prices rose 1.3 per cent in Las Vegas compared with a 2.9 per cent month-to-month gain in August. Home prices rose just 0.2 per cent in Tampa, Fla., after a 1.8 per cent gain in August.
Charlotte, N.C., was the only city where prices declined from August to September.
Year-over-year, prices jumped 13.3 per cent from September 2012, the fastest such gain since February 2006. Those gains may be putting some homes out of reach for many buyers. Mortgage rates have also risen since the spring, though they remain low by historical standards.
And the government shutdown delayed some sales in October because the IRS was unable to verify incomes, a critical part of the mortgage-approval process.
Home resales fell in October for a second straight month to a seasonally adjusted annual pace of 5.12 million, the lowest since June. That pace is still 6 per cent higher than it was a year earlier. But it’s below the roughly 5.5 million annual sales pace typical of a healthy market.
In addition, a measure of signed contracts to buy homes fell for a fifth straight month in October. That suggests that final sales will remain weak in coming months.
In October, signed contracts plunged in the West, where price gains have been the strongest. The Case-Shiller index showed that prices jumped more than 29 per cent in Las Vegas compared with a year ago and nearly 26 per cent in San Francisco.
Many economists argue that the Case-Shiller figures overstate recent price gains because the figures include foreclosed homes. Foreclosed homes usually sell for low prices, and as the proportion of foreclosed sales declines, that can push up price gains.