Home prices climbed 6.5% in the second quarter from a year earlier, a slower pace that adds to signs of a cooldown in the market.
Prices rose 1.1% on a seasonally adjusted basis from the previous three months, the smallest quarterly gain in four years, the Federal Housing Finance Agency said in a report Thursday. In June, prices climbed 0.2% from May, less than the 0.3% average of 13 economists surveyed.
The six-year-old housing recovery is finally showing its age as affordability starts to constrain purchases. Buyers are not only contending with price increases that have far outpaced incomes, as well as higher mortgage rates that have added to monthly costs. Price gains slowed from the first quarter's 7.3% increase from a year earlier, the FHFA said.
"We've sort of transitioned into a lower plane of growth," Sam Khater, chief economist for Freddie Mac, said in a phone interview before the FHFA report was released. "We're in a mature, late-stage expansion and housing is becoming overvalued. At some point, you lose customers on the margin as the market gets less affordable."
Tight supplies have also put a cap on sales. Purchases of previously owned homes declined for the fourth straight month in July to their slowest pace in more than two years, the National Association of Realtors said Wednesday.
The FHFA index measures transactions for single-family properties financed with mortgages owned or securitized by government-sponsored Fannie Mae and Freddie Mac. It doesn't provide prices. The national median price of an existing single-family home was $269,000 in the second quarter, up 5.3% from a year earlier, data from the Realtors group show.
