US home prices rose in August but the gains continued to slow from an April peak in part due to rising mortgage rates, according to a report.
The S&P Case-Shiller 20-city composite home price index rose 1.3 per cent in August, following a 1.8 per cent gain month-over-month in July.
On a seasonally adjusted basis, home prices in the 20 metropolitan areas picked up steam slightly, rising 0.9 per cent in August after a 0.6 per cent increase in July.
Year-over-year, single-family home prices were up 12.8 per cent, the largest annual increase since February 2006, months before the housing price bubble peaked. The increase was larger than analysts' average estimate at 12.4 per cent.
David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said the monthly percentage changes for the 20-city index showed the peak rate of gain in home prices was last April.
"Since then home prices continued to rise, but at a slower pace each month. This month 16 cities reported smaller gains in August compared to July. Recent increases in mortgage rates and fewer mortgage applications are two factors in these shifts," Blitzer said.
Average home prices across the country were back to their mid-2004 levels in August. Compared with the June/July 2006 peaks, the 20-city index was down about 21 per cent, the report said.
"Strengthening in home prices is a plus for growth through various channels, including increased consumer spending because of wealth and confidence effects, increased incentive to buy before prices go up some more, and increased incentive to lend because of less chance of mortgages turning delinquent," said Jim O'Sullivan, chief US economist at High Frequency Economics.
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