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WASHINGTON (AP) – House price rises in the United States slowed for the fifth straight month in August as rising mortgage rates drove down sales.
The S & P CoreLogic index of 20 cities on the price of housing Case-Shiller, released Tuesday, rose 5.5% in August over the previous year, down from a rise 5.9% the previous month.
This deceleration reflects a more general weakening of the country's real estate market. Existing home sales have declined for six consecutive months and new home sales have fallen in the last four months. House price increases have outpaced wage gains over the past five years and appear to have left many potential buyers out of the pockets.
Prices have risen the most in Las Vegas, San Francisco and Seattle. But price increases slowed compared to the previous year in 14 of the 20 cities monitored.
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The housing slowdown shows little signs of a broader crisis similar to that of 2007. David Blitzer, chairman of the S & P Dow Jones index committee, pointed out that defaults in mortgage payments, which had risen sharply during the housing crisis, remained stable.
Rising borrowing costs have resulted in increased monthly payments for new homebuyers, in addition to rising house prices. Some of the largest mortgage rate hikes occurred in September and October and are not reflected in Tuesday's data. This suggests that price gains are likely to slow further in the coming months.
The 30-year average fixed mortgage rate reached 4.86% last week, compared with 4.85% the previous week. A year ago, it was 3.94%.
"These challenges for buyers will continue to reduce affordability, reduce home sales and put downward pressure on home prices," said Cheryl Young, chief economist at Trulia real estate data.
Home prices in Las Vegas jumped 13.9% from a year ago and rose 10.6% in San Francisco. The value of Seattle homes rose 9.6%, the first time its gains have fallen below 10% since December 2015.
The lowest increases were registered in Washington, DC and New York with 2.8% each, followed by Chicago with 2.9%.
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