NEW YORK, June 27 US single-family home prices accelerated at a slower pace than expected in April, a survey showed on Tuesday.
The area saw an increase in sales prices of 8.2 percent in April from a year earlier, following annual gains of 8.4 percent in March and 8.5 percent in February, according to the closely followed Case-Shiller monthly real estate report series. April's result fell short of the 5.9 percent increase forecast in a Reuters poll of economists.
"If mortgage rates, now near 4 percent, rise further, this could deter more people from selling and keep pressure on inventories and prices", Blitzer said in a statement.
In spite of today's weaker-than-expected report, the annual rate of home price appreciation continues to be within the 5 percent to 6 percent range witnessed in the past year.
David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said the April increase in prices shows demand for homes is rising but the supply of homes has hardly kept up. The inventory of homes for sale stood at 11,615 last month, which is 2.3 months of housing supply, according to the Minneapolis Area Association of Realtors.
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That being said, the year-over-year gain in the overall index for single-family home values dropped to 5.0 percent, which is the smallest year-over-year gain since July of 2012 and versus 7.8 percent higher on a year-over-year basis at the same time last year, led by gains in the bottom third of the market.
Blitzer said it was unclear whether the market would eventually crash or gradually cool off, but adds that market conditions appear to be improving. First American's index factors in changes in incomes and mortgage rates.
"The question is not if home prices can climb without any limit; they can't", Blitzer said in a statement. Low mortgage rates are also encouraging more Americans to buy homes. It tracks the prices of typical single-family homes located in each metropolitan area provided. Those gains were the highest in almost three years.
Housing market observers have long speculated a looming increase in mortgage rates could slow demand, in turn putting the brakes on home prices. Portland's home prices are the second fastest-growing in the country, with year-over-year gains of 9.3 percent in April.