Home prices rise at slower pace in June

WASHINGTON — Home prices across the country rose at a slower pace in June, a sign that higher mortgage rates may finally be tempering the speed of price gains, analysts say.

Nationally, home prices were up 12.1 percent from a year ago and 2.2 percent from May, according to the Standard &Poor’s Case-Shiller index. But for the first time in more than a year, the 12-month increase was smaller than in the previous month.

Mortgage rates have been climbing steadily over the past three months, with the 30-year fixed average reaching a two-year high of 4.58 percent last week, according to data from mortgage giant Freddie Mac. New-home sales for July also declined significantly, falling by the most in three years in response to rising rates, according to a U.S. Census report last week.

An inventory crunch and high demand have driven home prices up over the past year, as buyers competed to find homes and lock in low mortgage rates. But rates are at the level where some buyers may no longer find a mortgage affordable, according to Erik Johnson, senior U.S. economist at IHS Global Insight.

“We’ve reached the point with rates where that is affecting home prices and the purchase decisions of home buyers,” Johnson said.

The price increases over the past few months caused chatter about the possibility of another bubble, Johnson said, so this month’s retreat was not necessarily a bad thing.

The housing market has been a pillar in the economic recovery. In recent months, mortgage rates have been driven higher on expectations that the Federal Reserve will begin tapering its massive stimulus program this year. The Fed’s measures, which include buying bonds, have kept interest rates low.

The rise in interest rates and consequent slowdown in home prices is largely in line with the expectations of many analysts but not significant enough to pose a threat to the housing recovery, said David Blitzer, managing director and chairman of the index committee at Standard &Poor’s.

Prices rose in all 20 cities that the index tracks, with San Francisco and Las Vegas posting the biggest increases from a year ago, 24.5 percent and 24.9 percent respectively. In Washington – which is still facing an acute inventory shortage – prices were up 1 percent from May and 5.7 percent from a year ago.

More in Herald Business Journal

Exec director of Future of Flight in Mukilteo stepping down

A former board president will temporarily lead Snohomish County’s most popular tourism attraction.

Seafood producer Keyport moves corporate HQ to Edmonds

The family business sees the city as business friendly — and able to accommodate expansion.

Peoples, HomeStreet banks bump lowest salaries after tax cut

The banks with Snohomish County branches will raise minimum salaries for employees to $15 an hour.

Amazon opens store with no cashiers, lines or registers

The Seattle store allows shoppers to use a smartphone app to pay for items they want.

Electroimpact cuts Mukilteo staff by 9 percent

“What we’re missing now is a monster anchor project,” the company’s VP said.

Exotic animals find compassionate care in Bothell (video)

At the Center for Bird and Exotic Animal Medicine, vets treat snakes, hedgehogs and even kangaroos.

How can you tell if you are getting good financial advice?

Assume that it’s still the same buyer-beware market that has always existed.

U.S. government proposes new rules for hog slaughter

The plan lets plant workers be in charge of removing unfit hogs, instead of government inspectors.

Glitches slow Boeing, SpaceX plans for human spaceflight

Boeing has an issue with its abort system that may cause the spacecraft to “tumble.”