Residential real-estate prices increased in June at a slower pace, a sign that the pace of improvement in the housing market is cooling.
The S&P/Case-Shiller index of property values in 20 cities rose 12.1% in June from the same month in 2012 after rising 12.2% in the year ended in May, which was the biggest gain since March 2006, the group said today in New York. The increase matched the median forecast of 25 economists in a Bloomberg survey.
Increasing property values are boosting household wealth, helping underpin consumer spending, which accounts for about 70% of the economy. At the same time, a jump in mortgage rates shows signs of curbing sales and refinancing, which will make it more difficult to tap home equity.
The “rate of growth of home prices is certainly slowing, but we’re still posting respectable year-over-year increases,” said Brian Jones, a senior U.S. economist at Societe Generale in New York and the top-ranked forecaster for the home-price index over the past two years, according to data compiled by Bloomberg. “Housing’s in good shape. We’re always going to keep one eye on mortgage rates to see if there is an appreciable impact going forward.”
Stock-index futures held earlier losses after the report. The contract on the Standard & Poor’s 500 Index maturing in September dropped 1% to 1,638 at 9:21 a.m. in New York as tension grew over possible military action in Syria.
Estimates in the Bloomberg survey for the year-over-year price gain ranged from increases of 10.7% to 12.6%. The Case-Shiller index is based on a three-month average, which means the June figure was also influenced by transactions in May and April.
Today’s report also included quarterly figures for the market nationally. Prices covering all of the U.S. climbed 10.1% in the second quarter from the same period in 2012, matching the year-over-year gain in the quarter ended March.
Home prices adjusted for seasonal variations rose 0.9% in June from the prior month after climbing 1% in May. San Diego and Las Vegas showed the biggest adjusted monthly increase, with prices rising 2.2%. Home prices declined in five cities, with Detroit showing the biggest loss at 1.4%.
Unadjusted prices climbed 2.2% from May as all 20 cities advanced.