U.S. home prices post smallest annual growth since November 2012
Home prices in 20 U.S. cities rose at a weaker pace in the year ended in August as borrowing standards remain tight and wage gains fail to accelerate.
The S&P/Case-Shiller index of property values increased 5.6 percent from August 2013, the smallest gain since November 2012, after rising 6.7 percent in the year ended in July, a report from the group showed today in New York. The median projection of 32 economists surveyed by Bloomberg called for a 5.7 percent advance. Nationally, prices rose 5.1 percent year-to-year after a 5.6 percent gain in July.
Property costs are appreciating more gradually as investor participation wanes and still-tight credit restrains first-time home buyers from entering the market. The fastest pace of payroll growth since 1999 may help bring stronger wage advances, helping to keep homeownership in reach for more Americans.
“We’re going to see a slower pace of increase, prices still going up, but at a slower pace, and that will help pull some of that sideline demand in,” said Lindsey Piegza, chief economist at Sterne Agee & Leach Inc. in Chicago. “I do expect prices to continue to slow in order to allow for new demand to come into the marketplace.”
Economists’ estimates in the Bloomberg survey ranged from gains of 4.9 percent to 10 percent. The S&P/Case-Shiller index is based on a three-month average, which means the August figure was also influenced by transactions in June and July.
Home prices in the 20-city index adjusted for seasonal variations decreased 0.1 percent in August from the prior month, weaker than the Bloomberg survey median that called for a 0.2 percent increase. Unadjusted prices rose 0.2 percent.
The year-over-year gauge, based on records dating back to 2001, 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.
