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Charlotte home prices up 7.6 percent in July over last year

Charlotte’s recent sizable housing price gains slowed in July, as buyers faced rising mortgage rates, according to a widely watched report released Tuesday.

Even so, home prices are up 7.6 percent in July from a year ago, for the 17th month in a row of year-over-year gains, according to the latest Standard & Poor’s Case-Shiller index report.

But price increases are losing steam in Charlotte and elsewhere, the report shows. In 15 of 20 cities tracked by the report, including Charlotte, monthly price gains slowed in July from June compared with the increase from May to June.

Some say higher mortgage rates are thought to be lowering demand for homes. Since May, rates are a full percentage point higher for a 30-year, fixed-rate mortgage, according to Freddie Mac.

And as demand for housing drops, prices tend to fall, too.

Others suggest the slowdown stems more from home prices cooling off after rising rapidly following the housing downturn.

David Blitzer, chairman of the Index Committee for S&P Dow Jones Indices, said in a statement Tuesday that the slowdown of U.S. home prices in recent months suggests that the rate of price gains might have peaked.

He said mortgage applications have fallen since mortgage rates have gone up, indicating the higher rates are having an impact on the housing market.

According to Case-Shiller, home prices in the 20 cities rose 12.4 percent in July from a year ago. Prices were up 1.8 percent from June to July.

Las Vegas reported the largest year-over-year increase of 27.5 percent. Atlanta; Detroit; Los Angeles; Miami; Phoenix; Portland, Ore.; San Diego; San Francisco; Seattle; and Tampa, Fla., also had double-digit gains.

Charlotte has seen year-over-year price increases every month since March 2012. The biggest for Charlotte so far in 2013 was in May, when prices rose 7.9 percent.

While Charlotte prices were up 1.24 percent from April to May and then 1.3 percent from May to June, they were up only 0.7 percent from June to July.

Pat Riley, president of Charlotte-based real estate company Allen Tate Cos., doesn’t think rising mortgage rates are the primary factor for the slowing price increases. Rather, prices are bound to come down after rocketing in the wake of the housing downturn, he said.

“In any kind of recovery, you’re going to appreciate faster the first couple of years,” he said. “The neighborhoods and counties … throughout the country, including Charlotte, that depreciated the most are going to appreciate the highest coming out of this.”

The unusually high levels of appreciation in Charlotte and the U.S. recently aren’t expected to last forever, he said, adding that some people are predicting U.S. homes will be appreciating at a rate of 3.2 to 3.4 percent a year by 2017. That’s been the normal rate of appreciation since about the 1950s, he said.

The higher home prices in Charlotte have, in large part, come from a tight supply of homes on the market, real estate officials say. In August, 15,348 Charlotte-area homes were for sale, down 14 percent from a year ago, according to the Charlotte Regional Realtor Association.

“We’ve had so many homes sell, if your home hasn’t sold, there’s a good chance it’s because it’s overpriced,” said Eric Locher, president of the association.

Charlotte’s August inventory was equal to 5.4 months of supply. Anything below six months of inventory is considered to be a seller’s market, according to a widely accepted definition. Charlotte brokers say the low number of homes for sale has led to bidding wars among some buyers, which drives up prices.

Some homes continue to sell quickly in the Charlotte area.

Phillip Jordan said he put his 3,156-square-foot home in Charlotte’s Beverly Crest neighborhood up for sale earlier this month without the help of a real estate broker. The home, listed on real estate website Zillow, is under contract for $421,500.

“Within two days, we had an offer,” he said, adding that low inventory was among the factors. Mortgage rates, which are still low, are also motivating people to buy, he said.

Eye on mortgage rates

Economists and real estate officials are carefully monitoring mortgage rates to see what impact further increases will have on home sales in Charlotte and the rest of the U.S. They say the rising rates have pushed some people to close deals in recent months before rates increase further.

According to mortgage giant Freddie Mac, the average rate for a 30-year, fixed-rate mortgage in August was 4.46 percent. That’s up 1 percent from May.

The Mortgage Bankers Association, in an August forecast, said it expects mortgage rates to continue rising, climbing as high as 5.1 percent by the fourth quarter of next year.

In a report on Case-Shiller’s Tuesday figures, Lindsey Piegza, an economist for Sterne Agee, said a mortgage rate increase of 1 percent adds $100 to $200 to monthly mortgage costs for a median-priced home.

“This certainly is not enough to pull the rug out from under the housing recovery, but it will be enough to deter some potential buyers or result in a reduction in spending elsewhere on other goods and services,” she wrote.

The Case-Shiller report tracks sales of existing homes. It is among other reports that show home prices continue to rise in Charlotte. Irvine, Calif.-based CoreLogic said earlier this month that Charlotte-area home prices jumped 8.3 percent in July from a year ago.

Roberts: 704-358-5248; Twitter: @DeonERoberts
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