Home Prices Grew 5.0 Percent in July

On Monday, the National Association of Realtors released a separate report showing that pending home sales pulled back by 1.4 percent in August after climbing by 0.5 percent in July.

The median estimate of 30 economists surveyed by Bloomberg called for a 5.2 percent year-over-year gain.

Home prices rose in all 20 cities over the past 12 months. Still, existing home sales are 6.2 percent higher than a year ago. For-sale housing is still very affordable in many cities across the country, however on the ground conditions are often hard, especially for first-time homebuyers.

Steady job growth and an economic recovery in its seventh year have encouraged more Americans to buy homes.

Chicago-area home prices rose 0.9 percent in July, beating the nation’s 0.7 percent, according to the widely watched index. The 10-City Composite and 20-City Composite both reported gains of 0.6% month-over-month.

Measured against a month earlier, property prices fell in 10 of the 20 cities in July and were unchanged in one, according to the seasonally adjusted data.

Blitzer expects further gains in home prices. “Most of the strength is focused on states west of the Mississippi”. The two smallest gains since January 2000 are Detroit (3%) and Cleveland (10%).

Average home prices for July remain comparable to their levels in the winter of 2005.

Blitzer said that the improving housing sector was a major contributor to a gross-domestic-product growth rate of 3.9 percent in the second quarter.

The report showed that compared to the prior year, the largest increases were seen in San Francisco and Denver, where home prices rose more than 10%, while home prices in Dallas were up 8.7% from the prior year.

Fourteen cities in the 20-City Index reported greater annual price increases in July than in the previous month.

San Francisco and Denver are the only cities with a double digit increase, and Phoenix had the longest streak of year-over-year increases.