This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Home Price Gains Beginning to Moderate: S&P

NEW YORK ( TheStreet) -- Home prices in the 20 largest metros rose 12.1% from a year ago in June after rising 12.2% in May.

The S&P/ Case-Shiller 20-City Composite Index rose 2.2% from May. On a seasonally adjusted basis, the index rose by a more modest 0.9% from the previous month.

The 20-City Index was expected to post a 1.1% monthly increase on a seasonally adjusted basis and a 12.2% increase year over year, according to Zillow.

Nationally, home prices rose by 10.1% over the past four quarters.

The Case-Shiller Index is based on a three-month moving average, so the index captures home price action for April, May and June.

The impact of rising interest rates in May and June on the index is therefore likely to be somewhat muted. The full impact of rising rates would likely be felt in September.

However, there are signs that prices are moderating. Although the top 20 cities all posted monthly and annual increases, only six cities-- Charlotte, Cleveland, Las Vegas, Minneapolis, New York and Tampa -- gained at a faster pace in June than in the previous month.

Home prices have been rising over the past year amid a shortage of supply. Recently, inventory has been rising and there are signs of buyer fatigue, which could moderate price action in coming months.

"Overall, the report shows that housing prices are rising but the pace may be slowing," said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. "As we are in the middle of a seasonal buying period, we should expect to see the most gains. With interest rates rising to almost 4.6%, home buyers may be discouraged and sharp increases may be dampened."

He also noted that other housing data, while positive, is not as robust as it was in the spring. Starts and sales of new homes, for instance, continue to lag the stronger pace set by existing homes.

Still, the 20-city index has gained 19% from its March 2012 low and is now only 23% below its June/July 2006 peak.

Significantly, the S&P Index does not factor in the impact of the share of distressed sales on prices. Therefore, it can exaggerate the impact of price increases as the share of foreclosures and short sales, which sell at a discount, decline.

U.S. home prices rose 8.4% year over year in June, according to a report from Lender Processing Services (LPS).

The LPS report is based on closings in June and represents the prices of non-distressed sales by taking into account the discounts of foreclosures and short sales. According to LPS, the index covers 89% of single-family residential properties in the U.S.

-- Written by Shanthi Bharatwaj New York.

>Contact by Email.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SPY $204.97 -0.02%
DIA $176.44 0.07%
XHB $33.30 -0.24%
IYR $78.75 0.38%
AAPL $93.24 -0.41%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs