Home prices picked up in August but are losing momentum in larger markets, a potential boon for buyers.
National home prices rose 3.2% in August, up from 3.1% in July, according to the S&P CoreLogic Case-Shiller National Home Price Index.
To be sure, some of the largest cities are struggling, which could benefit homebuyers. Prices in the nation’s 10 major cities rose 1.5%, down from the 1.6% gain in July. On the index’s 20-city composite, prices were 2% higher, unchanged from July’s gain.
The housing sector — a pillar for the U.S. economy — rebounded this summer following a weak start to the year, helping to ease recession fears. At the same time, lower mortgage rates have given homebuyers a reprieve.
Recent data, however, has remained mixed. The pace of existing-home sales fell in September after two months of gains, according to the National Association of Realtors. Meanwhile, new-home sales dipped last month, the Commerce Department said. The batch of weaker-than-expected housing data could be temporary, some analysts said.
Fresh housing data released Tuesday signaled the housing market is continuing to gain strength. Pending home sales, a gauge of purchases before they become final, rose 1.5% in September, the National Association of Realtors said. Meanwhile, the homeownership rate climbed to 64.8% in the third quarter, up from 64.4% a year earlier, the Commerce Department reported.
The Federal Reserve has signaled that it would take a more measured approach to lowering borrowing costs, which could contain the recent drop in mortgage rates. Even so, some experts say that homebuyers will continue to benefit from low rates in the near term.
“The consumer is in excellent shape,” said Sam Dunlap, senior portfolio manager at Angel Oak Capital Advisors. “Concerns about rising home prices have moderated, which should help Americans from an affordability perspective.”
The Case-Shiller data offered signs that markets on the West Coast are continuing to slow. Las Vegas dropped from second to eight among the cities in the 20-city composite, falling from a 4.7% annual gain in July to 3.3% in August.
Phoenix led the U.S. with an annual home-price increase of 6.3%. Meanwhile, price gains in the Southeast remained strong. Charlotte, North Carolina; Tampa, Florida and Atlanta, Georgia, were among the cities that saw prices rise 4.5%, 4.3% and 4%, respectively.
