US home prices rise at slowest pace in nearly a year

WASHINGTON (AP) — U.S. home prices rose in July at the slowest pace in 10 months as climbing mortgage rates become a more significant factor for a growing number of prospective buyers.

The S&P CoreLogic Case-Shiller 20-city home price index increased 5.9 percent in July compared with a year earlier, down from a 6.4 percent annual gain the previous month.

Home prices are rising at twice the rate of wages, which has likely contributed to a cooling in the market this year. Sales of existing homes have dropped 1.5 percent in the past 12 months. Mortgage rates last week reached their highest level since May.

“Coupled with mortgage rate increases, higher prices are stifling home sales as more buyers are priced out of the market,” Danielle Hale, chief economist at Realtor.com, said Tuesday after the report was released.

Las Vegas, Seattle and San Francisco reported the biggest annual gains, with all three cities seeing double-digit increases. Yet in 15 of 20 cities, price gains were smaller in July than in the same month a year earlier.

The combination of rising home prices and higher mortgage rates has made homes less affordable, even as a strong job market and some signs of higher pay have lifted demand.

The average 30-year mortgage rate rose to 4.65 percent last week, according to mortgage giant Freddie Mac. That is up from 3.83 percent a year ago.

Any rate below 5 percent is very low by historical standards, but many homeowners locked in rates below 4 percent in the past five years.