By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — U.S. home prices in June posted another month of fast growth, though the data signal some moderation, according to a report released Tuesday morning.
With gains in cities across the country, U.S. home prices increased 2.2% in June, a strong result but down from 2.5% in May, according to the S&P/Case-Shiller gauge.
In six cities prices rose faster in June than they did in May. In May 10 cities had posted faster monthly growth.
Annual home-price growth hit 12.1% in June, down from 12.2% in May, when prices hit the fastest year-over-year pace since 2006.
“Overall, the report shows that housing prices are rising but the pace may be slowing,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. “With interest rates rising to almost 4.6%, home buyers may be discouraged and sharp increases may be dampened.”
Overall, home prices remain about 23% below a bubble peak. However, the story varies widely by city. Prices in Denver and Dallas hit record highs in June. At 2.1%, New York posted its fastest monthly growth since 2002. Meanwhile, prices in some cities remain depressed, despite fast growth. For example, prices in Phoenix were about 40% below peak in June.
The Case-Shiller report lags, but echoes, other recent data that have signaled a softening housing market.
While analysts say rising interest rates are likely behind a slowing rebound, the evidence is mixed. For example, last week the U.S. Department of Commerce reported that sales of new homes slumped in July with each region seeing sizeable drops. However, a separate report last week on existing homes showed that sales in July jumped to their highest level since late 2009, with buyers looking to lock in mortgage rates before they rise further.
Economists note that the housing market continues to improve on an annual basis. Further, they expect residential investment to continue to add to economic growth this year, though that contribution may narrow.
Ruth Mantell is a MarketWatch reporter based in Washington. Follow her on Twitter @RuthMantell.
