WASHINGTON (AP) — U.S. home prices increased at a slower pace in June — a cooldown that could continue for several more months.
The Standard & Poor's/Case-Shiller 20-city home price index rose 8.1 percent in June from 12 months earlier, according to a Tuesday report. That's down from 9.4 percent a month earlier and the smallest annual gain since December 2012.
Yearly price growth weakened in all 20 cities. Home values in Cleveland nudged up just 0.8 percent. Las Vegas led with a 15.2 percent gain. But prices in Las Vegas, Phoenix, Miami and Tampa, Florida, are still at least 33 percent below their housing bubble peaks of almost a decade ago.
The deceleration should help ease some of the price pressures on would-be buyers. After slumping at the start of 2014, existing-home sales have picked up as price gains have slowed. But buying remains 4.3 percent below the July 2013 level, according to the National Realtors Association.
Price growth should continue to slow now that the recovery from the Great Recession has entered its sixth year. Many economists project that the Federal Reserve will begin to raise short-term interest rates in 2015 because the economy has strengthened, which could cause mortgage rates to rise from relative lows and make it more expensive to borrow.
"Rising mortgage rates won't send housing into a tailspin, but will further dampen price gains," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.
Even hot markets such as San Francisco — where a two-bedroom condominium can cost more than $1 million — are finding that price growth has slowed. Prices in that city rose 12.9 percent in June, compared with an annual growth rate of 18.4 percent in April.
The sharp price gains of the past few years had been part of a natural snap back in response to the devastating housing bust, which triggered the recession at the end of 2007. Still, the fallout from that downturn continues to cast a shadow over the real estate market.