Home prices in the 20 largest U.S. cities rose in July by 12.4 percent year-over-year, the largest such increase in more than seven years, according to the S&P/Case-Shiller index of property values. Price appreciation on a month-to-month basis slowed, however.
An eventual scaling back of the Federal Reserve’s stimulus program – which held mortgage rates at artificial lows– will lead to a slowdown in the growth of home prices, according to Brian Jones, a senior U.S. economist at Societe Generale in New York.
“The increase in mortgage rates will slow things down a bit at the margin,” Jones told Bloomberg News. “As the economy does better, people will be in a better position to weather the higher rates.”
But consumer confidence fell in September to 79.7, a four-month low, according to a sentiment index released by the Conference Board and seen by Bloomberg News. In August, the sentiment index was at 81.8, the data show.
Lennar Corp. the third-largest U.S. homebuilder by revenue, said today that its third-quarter earnings jumped as the company sold more houses and raised prices.
“We continue to see long-term fundamental demand in the market driven by the significant shortfall of new single-family and multifamily homes built over the last five years,” Lennar CEO Stuart Miller said in a statement. “While there may be bumps along the road that may impact the short-term pace of the recovery, the long-term outlook for our business remains extremely bright.” [Bloomberg News] – Hiten Samtani