U.S. home price growth eased in June, according to the latest S&P/Case-Shiller report, with all major metropolitan cities tracked reporting lower annual rates than the previous month.
“Home price gains continue to ease as they have since last fall,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices. He said it was the first time since February 2008 that all cities reported lower annual rates than the prior month.
On a non-seasonally adjusted basis, national U.S. home prices climbed 0.9% in June from the prior month, a slight deceleration from the prior report, according to the S&P/Case-Shiller Home Price Indices. Each market reported an increase in June, led by some stronger gains in New York, Chicago, Las Vegas and Detroit.
The slowing home-price growth so far this year isn’t a surprise to observers, as many housing experts and home-improvement retail executives have long predicted that price appreciation in 2014 wouldn’t match last year’s 11% jump. With home prices slowing and rents rising, some are hopeful potential home buyers will be motivated to make a purchase.
“Other housing indicators — starts, existing home sales and builders’ sentiment — are positive,” Blitzer said. “Taken together, these point to a more normal housing sector.”
The housing sector’s recovery has progressed slowly and unevenly. Builder sentiment has improved and inventory has been increasing, but there are still some concerns about underlying demand. Many worry about tight lending standards, which are especially problematic for potential Millennial home buyers that on average hold a lot of student debt. In the latest sign that housing demand hasn’t accelerated as much as some have hoped, the Commerce Department last week reported new home sales dropped in July from the prior month and fell short of the market’s expectations.