Year-over-year gains in home prices in large U.S. cities slowed in February, another sign the market cooled before the spring home buying season kicked off, according to a closely watched index.
The S&P/Case-Shiller index of 20 large U.S. metropolitan areas, released Tuesday, was flat from January's level. The gauge was up 12.9% from February 2013, the slowest 12-month increase since August. Only five cities saw year-over-year price gains quicken.
“The annual rates cooled the most we’ve seen in some time,” David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.
Thirteen cities saw prices fall in February from January's level, including Las Vegas. The desert city hadn’t seen prices drop from one month to the next in nearly two years.
The housing market has cooled recently as buyers have struggled to afford a home after prices and interest rates rose last year. Economists say severe weather at the beginning of this year also helped freeze the market in much of the country.
The Case-Shiller index, created by economists Karl E. Case and Robert J. Shiller, is widely considered the most reliable read on home values.
The housing index compares the latest sales of detached houses with previous sales, and accounts for factors such as remodeling that might affect a house's sale price over time.
The index, however, trails other indicators. On Monday, the National Assn. of Realtors reported buyers signed more contracts for previously owned homes in March than a month earlier, the first increase in nine months.
Still, other recent data, including new-home sales, construction and closed transactions for previously owned homes have been lackluster.
“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,” Blitzer said.