Home prices still rising, although at reduced rate
Posted on Wednesday, August 28, 2013 at 12:49:55 PM
Home prices are still going up, although the pace has been slower lately.
Recent data from the S&P/Case-Shiller Home Price Index has shown that from May to June, prices only rose at a seasonally adjusted annual rate of 0.9 percent across the 20-City composite. While that is slightly slower than from April to May, the second quarter as a whole was still an improvement, up 7.1 percent.
The affordability of residential financing has helped buyers continue the housing segment's growth, but some are still concerned about the effect rising rates might have.
David Blitzer, Index Committee chairman at S&P Dow Jones Indices, explained that the report showed prices rising but the overall pace decreasing, while 13 out of the 20 cities had weakening returns.
"As we are in the middle of a seasonal buying period, we should expect to see the most gains," Blitzer added. "With interest rates rising to almost 4.6 percent, home buyers may be discouraged and sharp increases may be dampened."
Residential financing might be affected as mortgage rates increase, with a 30-year fixed rate averaging 4.58 percent over the past week, according to data from Freddie Mac.
However, Jed Kolko, chief economist for Trulia, believes that the housing market is 64 percent back to normal. He stated that prices and existing-home sales are at a more sustainable level, a positive for many buyers.