US home prices rose in February but at slower annual pace, adding evidence to the faltering recovery in the housing market, the S&P/Case-Shiller index shows.
The 20-city index of home prices rose 12.9 per cent in February from a year ago, the fourth consecutive month of slowing annual price gains.
In January, home prices were up 13.2 per cent year-on-year.
Month-over-month, home prices were up 0.8 per cent on a seasonally adjusted basis but flat in unadjusted terms.
“The annual rates cooled the most we’ve seen in some time,” David Blitzer, chairman of the index committee, said on Tuesday.
“On a month-to-month basis, there is clear weakness.”
Thirteen of the 20 metropolitan areas saw lower annual rates.
The recovery in the housing market, once seen as an engine for the economy’s recovery from the Great Recession, has soured.
Sales of existing and new homes were flat or lower in March, new home construction was weak and home prices have not returned to levels before the real estate bubble collapsed in 2006.
Analysts in part have blamed a sharp spike in mortgage interest rates last May, after the Federal Reserve signalled it would begin to curb stimulus for the economy, for the slowdown in the market, along with tight credit conditions and tepid consumer confidence.
“Five years into the recovery from the recession, the economy will need to look to gains in consumer spending and business investment more than housing. Long overdue activity in residential construction would be welcome, but is certainly not assured,” Blitzer said.
Ian Shepherdson of Pantheon Macroeconomics said that housing prices were actually falling. The Case-Shiller data do not properly account for foreclosure sales, where homes typically are sold well below market prices.
“We think the underlying trend in home prices already is much weaker than CS suggests; they are probably falling slightly, seasonally adjusted,” he said.