U.S. home prices in May rose at their slowest pace since February of last year, the latest indication the housing sector is cooling as it heads into the key summer selling season.
On a non-seasonally adjusted basis, the 20-city composite climbed 1.1% in May from the prior month, according to the S&P/Case-Shiller Home Price Indices. Each market reported an increase on a month-to-month basis. And while all major metropolitan cities continued to report year-over-year price increases, the gains weakened in May.
Housing experts and home-improvement retail executives have predicted home prices will rise again this year, after climbing 11% last year, though the price appreciation is projected to slow in 2014. With home price growth slowing and rents rising, some are hopeful more potential home buyers will be motivated to make a purchase.
“Housing has been turning in mixed economic numbers in the last few months,” said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. “Prices and sales of existing homes have shown improvement while construction and sales of new homes continue to lag.”
Key housing reports have indicated conditions remain choppy in the housing sector. A report this week indicated pending home sales dropped in June, retreating after three consecutive months of growth, and sales of new homes were also reportedly lower for the month. But with price appreciation slowing and home inventory rising, the sector could be better positioned down the road.