Home prices in U.S. cities increase by most in seven years

Gains Peaking

“More cities are experiencing slow gains each month than the previous month, suggesting that the rate of increase may have peaked,” David Blitzer, chairman of the S&P index committee, said in a statement.

The month-over-month gains were led by a 2.5% jump in Las Vegas. Property values fell in Minneapolis and Cleveland.

Unadjusted prices climbed 1.8% in July from the previous month.

The year-over-year gauge provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index. Year-over-year records began in 2001.

All 20 cities in the index showed a year-over-year gain, led by a 27.5% surge in Las Vegas. San Francisco, Los Angeles and San Diego also showed gains in excess of 20%.

Southwest Rebounds

“The Southwest continues to lead the housing recovery,” said Blitzer. Nonetheless, values in all cities still remain below their prior peaks, he said.

Sales of previously owned properties rose 1.7% in August to a 5.48 million annual rate, the most since February 2007, as buyers rushed to lock in interest rates that were starting to climb from near record-low levels, data from the National Association of Realtors showed last week. The number of existing houses on the market was 2.25 million at the end of August, the fewest for that month since 2002.

Lawrence Yun, chief economist at the Realtors group, said the surge in sales in August was probably the “last hurrah” for the next year to 18 months as higher prices and the jump in mortgage rates hurts affordability for some buyers.

The rate on 30-year home loans averaged 4.50% in the week ended Sept. 19, close to the highest level since July 2011, according to data from McLean, Virginia-based Freddie Mac. The rate, which was as low as 3.81% at the end of May, began rising since Fed Chairman Ben S. Bernanke that month indicated the central bank may slow asset purchases.

Builder Sales

Lennar Corp. the third-largest U.S. homebuilder by revenue, said today that its fiscal third-quarter earnings rose as the company sold more houses and raised prices.

“We continue to see long-term fundamental demand in the market driven by the significant shortfall of new single-family and multifamily homes built over the last five years,” Stuart Miller, chief executive officer of the Miami-based builder, said in a statement. “While there may be bumps along the road that may impact the short-term pace of the recovery, the long-term outlook for our business remains extremely bright.”

Lennar’s sales rose to $1.6 billion in the three months through August from $1.1 billion a year earlier as the number of homes delivered increased to 4,990 from 3,655. The average selling price increased to $291,000 from $258,000, and orders jumped 14%.

The Fed last week maintained its $85 billion monthly pace of bond buying, saying it needs additional evidence of sustained improvement in the economy. “The tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement,” policy makers said in a statement after their meeting.

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