U.S. home prices rose in June by the smallest year-over-year amount in 20 months, slowed by modest sales and more properties coming on the market.
Data provider CoreLogic said Tuesday that prices rose 7.5 per cent in June compared with 12 months earlier. That’s a solid gain but less than the 8.3 per cent year-over-year increase in May and a recent year-to-year peak of 11.9 per cent in February.
On a month-to-month basis, June prices rose just 1 per cent, down from 1.4 per cent in May. But CoreLogic’s monthly figures aren’t adjusted for seasonal patterns, such as warmer spring weather.
The slowing price gains should make buying a house more affordable. Prices had risen sharply last year, along with mortgage rates. At the same time, Americans’ paycheques haven’t risen nearly as fast, having increased roughly 2 per cent a year since the recession ended – about the same pace as inflation. Many would-be buyers, particularly younger ones, were priced out of the market as a result.
Sales of existing homes fell in the second half of last year and have only modestly recovered since then. They rose to a seasonally adjusted annual rate of 5.04 million in June, the third straight increase. But that was still 2.3 per cent fewer than the pace a year earlier.
And a measure of signed contracts slipped 1.1 per cent in June, suggesting that sales might cool in coming months. It typically takes one to two months for a signed contract to become a completed sale.
More homes have been put up for sale, though the supply remains generally tight. There were 2.3 million homes for sale at the end of June, 6.5 per cent higher than a year ago.
Home prices in Arkansas fell 0.4 per cent in June compared with a year earlier, CoreLogic’s report said. It was the only state to post a decline. The states with the biggest increases were Michigan, where prices jumped 11.5 per cent; California, 11.3 per cent; Nevada, 11.1 per cent; Hawaii, 10.8 per cent; and Oregon, 9.5 per cent.
Overall, prices rose in 98 of the 100 largest cities tracked by CoreLogic from a year earlier. They fell in Worcester, Massachusetts and in Little Rock, Arkansas.
Most economists forecast that sales will barely rise this year from 2013’s pace of 5.1 million. Sluggish sales, in turn, will slow annual price gains this year to roughly 5 per cent or 6 per cent, economists predict.