U.S. home prices increased 1.0% in June compared to May and increased 4.5% compared to June 2014, according to the S&P/Case-Shiller home price index.
The index's 20-city composite – comprising the 20 largest cities in the U.S. – saw a 1.0% increase in June, month over month, while the 10-city composite posted a gain of 0.9%.
On an adjusted basis, the national index was up only 0.1%, while the 10-city and 20-city composites were both down 0.1%, month over month.
Year over year, the 20-city composite was up 5.0% compared with June 2014, while the 10-city composite was up 4.6%.
All 20 cities reported increases in June before seasonal adjustment. After seasonal adjustment, nine were down, nine were up, and two were unchanged.
Denver, San Francisco and Dallas reported the highest year-over-year gains among the 20 cities, with price increases of 10.2%, 9.5% and 8.2%, respectively.
Eleven cities reported greater price increases in the year ended June over the year ended May.
Denver was the only city with a double-digit increase in June, while Phoenix and Detroit had the longest streaks of year-over-year increases. Phoenix reported its seventh consecutive year-over-year increase at 4.1%. Detroit recorded its sixth consecutive year-over-year increase, at 5.7%.
‘Nationally, home prices continue to rise at a 4% to 5% annual rate – two to three times the rate of inflation,’ says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a statement. ‘While prices in San Francisco and Denver are rising far faster than those in Washington, D.C., New York or Cleveland, the city-to-city price patterns are little changed in the last year. Washington saw the smallest year-over-year gains in five of the last six months; San Francisco and Denver ranked either first or second of all cities in the last five months. The price gains have been consistent as the unemployment rate declined with steady inflation and an unchanged Fed policy.
‘The missing piece in the housing picture has been housing starts and sales,’ Blitzer adds. ‘These have changed for the better in the last few months. Sales of existing homes reached 5.6 million at annual rates in July – the strongest figure since 2007. Housing starts topped 1.2 million units at annual rates with almost two-thirds of the total in single-family homes. Sales of new homes are also trending higher. These data point to a stronger housing sector to support the economy.’
The looming Fed rate increase and volatility in the stock market, however, remain black clouds on the horizon, Blitzer says.
‘A one-quarter point increase in the Fed funds rate won't derail housing,’ he says. ‘However, if the Fed were to quickly follow that initial move with one or two more rate increases, housing and home prices might suffer. A stock market correction is unlikely to do much damage to the housing market; a full-blown bear market dropping more than 20 percent would present some difficulties for housing and for other economic sectors.’