Home prices rose in July across the United States, helped by shrinking inventories and historically low interest rates, according to the Standard & Poor's/Case Shiller index.
During July, the Case-Shiller index of 10 major metropolitan areas and its 20-city index rose 1.5 percent and 1.6 percent, respectively, from June. This was the third consecutive month that both composites recorded positive monthly changes.
“Home prices increased again in July,” says David M. Blitzer, chairman of the S&P index committee. “All 20 cities and both composites were up on the month for the third time in a row. Even better, 16 of the 20 cities and both composites rose over the last year. Atlanta remains the weakest city but managed to cut the annual loss to just under 10 percent.”
Home sales have been bolstered by the lowest mortgage rates on record. Record low interest rates — pushed down by the Federal Reserve’s bond buying initiative — are encouraging buyers into the housing market. The average rate on the 30-year fixed mortgage touched a record low of 3.49 percent last week and has been below 4 percent all year. A limited supply of homes, along with fewer foreclosures and short sales, has also helped drive prices higher.
“Among the cities, Miami and Phoenix are both well off their bottoms with positive monthly gains since the end of 2011. Many of the markets we follow have seen some decent recovery from their respective lows – San Francisco up 20.4 percent, Detroit up 19.7 percent, Phoenix up 17.0 percent and Minneapolis up16.5 percent, to name the top few. These were some of the markets that were hit the hardest when the housing bubble burst in 2006. The 10 city has increased 7.4 percent and the 20 city 7.8 percent since their recent lows. The positive news in both the monthly and annual rates of change in home prices over the past few months signals a possible recovery in the housing market.”
Prices fell from a year earlier in Atlanta, Chicago, New York and Las Vegas.
Prices are also rising because of a decline in foreclosures and sales of other deeply discounted homes. Many homes in the foreclosure process will likely come on the market in the coming months as short sales, auctions or bank-owned REO sales, which could drag down prices.
To read the full report, visit S&P Case-Shiller’s July news release.
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