In this Tuesday, June 11, 2013, photo, a single house is offered for sale in Santa Monica, Calif.  Sandard & Poor's/Case-Shiller reports on home prices in May on Tuesday, July 30, 2013. (AP Photo/Nick Ut)
Nick Ut/AP
By Steven C. Johnson

NEW YORK -- U.S. single-family home prices rose in June though the pace of gains slowed slightly, a closely watched survey showed Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas rose 0.9 percent on a seasonally adjusted basis, just shy of economists' forecast for a 1 percent increase. Prices rose 1 percent in May. On a non-adjusted basis, prices rose 2.2 percent.

Compared to a year earlier, prices were up 12.1 percent, in line with economists' expectations. Prices were up 12.2 percent in the year to May, the biggest gain in more than seven years.

The report suggested the housing sector continues to recover, making it a bright spot in the broader U.S. economic rebound. Prices in all 20 cities rose on a yearly basis, led by a 24.9 percent surge in Las Vegas followed closely by a 24.5 percent gain in San Francisco. Only in six cities, however, did prices rise in June at a faster clip than in the previous month, down from 10 in May.

"Overall the report shows that housing prices are rising but the pace may be slowing," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement. "With interest rates rising to almost 4.6 percent, home buyers may be discouraged and sharp increases may be dampened."

Borrowing costs are up more than a percentage point since May in anticipation that the Federal Reserve will begin pulling back on support for the economy by purchasing fewer bonds. Its monthly purchases had been keeping long-term interest rates low.

Other housing data has suggested higher mortgage rates are slowing refinancing activity and possibly the pace of sales. Data last week revealed sales of new single-family homes fell 13 percent in July to their lowest level in nine months.

"Other housing news is positive, but not as robust as last spring," Blitzer said.

Still, rates remain low by historical standards and most economists do not expect the higher costs to end the recovery altogether. In the short-term, it could also spur potential buyers to act before rates rise further.

On a quarterly basis, prices were up 7.1 percent between April and June and 10.1 percent over the last four quarters, the S&P/Case-Shiller data showed.

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Make sure you can actually afford to "live" after you have paid your monthly mortgage payment. Set a price that you are comfortable with, not what the bank, broker or agent says you "can qualify for." This means do not buy more house that you can pay for and still pay your other financial obligations (food, utilities, insurance, taxes, etc.). You must educate yourself when thinking about one of the biggest purchases of your life! Try an amazon ebook "stuff I told my kids about how to buy your first house." Less than 3 bucks and free to borrow for prime members. I got this for my son to get some basic info BEFORE he sees anything with a real estate agent.

August 28 2013 at 8:42 AM Report abuse rate up rate down Reply
Michelle Courtney

Seriously? These price hikes are continuously occurring like it was something very common. It might sound good for people who are considering for sale Potts Point but what about the people who are buying? They have to deal with this increase.

August 27 2013 at 11:10 PM Report abuse rate up rate down Reply

Unless, of course, you live in the least free state of the nation (NY) with high taxes, the SAFE ACT and all kinds of immigrants (mostly Muslim) moving in. Especially if you live in Upstate NY where the majority of homes on the market are people moving out of the state instead of up. If you live in the Capital District as I do .. my home on the market since mid-April you will see that most people can only afford the mid 300Ks or less no matter how much square footage, updating, or even land that you own. The reason why is because the only people left here who can afford your home are locals and most of them are state workers. Unfortunately we will have to give this home away to escape from NY. I expect them to lose even more congressional districts the way people are moving out of here. And that may be a good thing!

August 27 2013 at 4:47 PM Report abuse rate up rate down Reply