The solid housing recovery is supporting further gains in home prices, according to the Standard & Poor’s/Case-Shiller report released Tuesday. Kathleen Madigan joins MoneyBeat with details.
Home prices in 10 major U.S. cities increased 11.8% in the year ended in May, according to the S&P/Case-Shiller home price index. Home values in 20 cities were up 12.2% on the year, compared to a 12.4% gain projected by economists.
On a non-seasonally adjusted basis, the 10-city index increased 2.5% in May from April, and the 20-city index increased 2.4%.
Prices in Dallas and Denver surpassed their pre-financial crisis peaks set in June 2007 and August 2006, respectively. “This is the first time any city has made a new all-time high,” the report said.
In addition, five cities—Atlanta, Chicago, San Diego, San Francisco and Seattle—posted monthly gains of more than 3% for the first time, said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices.
Home prices have been rising for more than a year. Low mortgage rates and stronger job growth lifted demand at a time when supplies of homes were relatively tight.
The recent increase in mortgage rates could slow the uptrend in home prices. Some potential buyers may no longer qualify for a mortgage at the higher rates, and they may have to lower their price bids on a home in order to keep the monthly mortgage payments down to an affordable level.
Averaged across all cities, the home price indexes have returned to levels last seen in the spring of 2004, but remain 24%-25% below the June-July 2006 peaks, said the report.