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Home prices hit new peak


Home prices hit new records in August nationally and in several major cities, driven by low interest rates and a tight inventories, according to leading indices released this week.

Nationally, home prices saw an annual gain of 6.1 percent, up from 5.9 percent in July, according to the S&P CoreLogic Case-Shiller indices.

homepricecaseCase-Shiller’s 10-city and 20-city composite indices made annual  gains in August of 5.3 percent and 5.9 percent, respectively. On a year-over-year basis, both composite indices posted slightly higher growth in August than in July.

Among the cities, home prices as of August rose the fastest in the Seattle metropolitan area (up 13.2 percent annually), followed by Las Vegas (up 8.6 percent) and San Diego (up 7.8 percent), Case-Shiller reported.

“Home-price increases appear to be unstoppable,” says David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. Blitzer said housing inflation has far outpaced other segments of the economy.

“The price gains are not simply a rebound from the financial crisis. Nationally and in nine of the 20 cities in the report, home prices have reached new all-time highs,” Blitzer said. He predicted that the trend of rising prices wouldn’t last, as interest rates rise.  

“Measures of affordability are beginning to slide, indicating that the pool of buyers is shrinking,” Blitzer said. “The Federal Reserve is pushing short-term interest rates upward and mortgage rates are likely to follow over time, removing a key factor supporting rising home prices.”

On Monday, Black Knight reported that its national price index was at a peak in August at $282,000. The national index has risen 6.2 percent year over year and has come up 41.5 percent since the bottom of the market.

Black Knight noted, however, that the monthly price gain of 0.24 percent in August was roughly half the monthly gain in July. August marked the fifth consecutive month of slowing price growth, Black Knight said.  

Last week, the Federal Housing Finance Agency reported that its monthly price index had an annual gain of 6.6 percent in August. 


 

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