U.S. home prices see biggest jump in seven years in July

But consumer confidence falls in September

U.S. home prices are on the rise
U.S. home prices are on the rise

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.”

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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