(CN) — Home prices and mortgage rates surged in May, inspiring a pullback from potential buyers that slowed overall sales, a popular sector analyst said Tuesday.
The latest S&P CoreLogic Case-Shiller 20-city home price index shows home prices rose 6.5 percent in May from a year earlier. This rise coincided with an increase in mortgage rates, that significantly pushed up monthly costs for home buyers.
Sales of homes worth less than $250,000 have declined nationwide over the past year, a sign that many in the middle class and possible first-time buyers are getting priced out of the market because they cannot find an affordable home.
By contrast, sales of homes worth more than $1 million have surged 7.6 percent this year.
Prices rose 13.6 percent in Seattle from a year earlier, 12.6 percent in Las Vegas and 10.9 percent in San Francisco. Prices rose a strong 8.5 percent in Denver, 7.6 percent in Los Angeles, 7.3 percent in Phoenix, and 6 percent in Charlotte, North Carolina. Washington, D.C. reported the smallest increase, at 3.1 percent.
According to the Commerce Department, sales of existing homes have fallen for three straight months after peaking in November. Pending home sales have also declined over the past year.
Sales of newly-built homes, which had been growing at a solid pace this year, also fell 5.3 percent in June.
In other economic news, the Conference Board, a business research group, reported Tuesday that Americans were a bit more confident about the economy in July, but their expectations for the near future dimmed slightly.
The index measures both consumers’ assessment of current economic conditions and expectations for the future. It latest consumer confidence index rose to 127.4 this month from 127.1 in June.
On Friday, the government reported the nation’s economy grew at a solid pace of 4.1 percent in the second quarter. Meanwhile, the national unemployment rate remains at a low 4 percent.