Home prices rose faster during the first seven months of 2013 than any year since 2004, the year that marked the beginning of the home-price bubble.
The S&P/Case-Shiller home price index for 20 major metro areas released Tuesday offers the latest sign of runaway price inflation earlier this year, amid short supplies of homes for sale, heavy demand, and very low mortgage rates.
Prices tend to slow down after June, but the July report showed still strong price gains. Prices rose by 1.8% from June, the largest June-to-July increase in the 14-year history of the 20-city index.
The year-to-date gains, however, are the most eye-opening. Prices in July stood 11.2% above the level of December 2012. By contrast, prices in the same period last year were up 5.8%. In 2004, prices rose by 11.3% year-to-date through July.
The Case-Shiller index tracks home prices on a three-month moving average; Tuesday’s report measured prices on home sales that were recorded in the May-to-July period, and buyers would have closed on contracts to buy those homes one or two months before then.
Rising mortgage rates could ultimately slow the pace of price gains, though the supply of homes for sale still remains quite tight in many parts of the country.
Source: Wall Street Journal