Home prices in 20 U.S. cities rose in June at the slowest monthly pace in almost two years, as demand cools in the face of affordability constraints including elevated mortgage rates, according to S&P CoreLogic Case-Shiller data released Tuesday.
The seasonally adjusted 20-city index rose 0.1% month-over-month (the estimate was 0.2%) after a 0.2% gain the prior month, the smallest gain since July 2016 20-city property values index increased 6.3% year-over-year (the estimate was 6.4%), after rising 6.5% the prior month.
The figures reinforce other recent signs that the residential real estate market is softening. The National Association of Realtors said purchases of previously owned homes fell to a two-year low in July amid supply constraints and escalating prices. Government data showed a similar trend in the new-home market, with sales dropping to a nine-month low.
While a strong job market and elevated consumer optimism have continued to provide support for home sales in major cities, hurdles include mortgage rates near a seven-year high, as well as a dearth of listings. Wage gains also remain tepid.
Las Vegas led the latest gains with a 13% annual increase, displacing Seattle as the fastest gainer, as employment and population advance in the Nevada city, according to the report. Seattle had a 12.8% increase, followed by 10.7% in San Francisco. While all cities posted advances from a year earlier, New York was the only metropolitan area to see a drop from the previous month, as changes to tax deductions hamper demand.
"Even as home prices keep climbing, we are seeing signs that growth is easing in the housing market," David Blitzer, chairman of the S&P index committee, said in a statement. "Sales of both new and existing homes are roughly flat over the last six months amidst news stories of an increase in the number of homes for sale in some markets."
After seasonal adjustment, Las Vegas had biggest month-over-month rise at 1.4%, followed by Cleveland, Detroit and Minneapolis, each with a 1% increase. After New York's decline, Dallas had smallest gain at 0.4%.
