Single family home prices rise, but at less feverish pace

U.S. single-family home prices rose in July, albeit at a slightly slower pace, a closely watched survey showed on Tuesday.

Even so, the year-on-year gain was the strongest in more than seven years.

The S&P/Case Shiller composite index of 20 metropolitan areas rose 0.6 percent on a seasonally adjusted basis, compared to economists' forecasts for a 0.8 percent gain. Prices rose 0.9 percent in June.

On a non-adjusted basis, prices rose 1.8 percent.

Compared to a year earlier, prices were up 12.4 percent, matching economists' expectations and marking the strongest rise since February 2006. Prices were up 12.1 percent in the year to June.

The report suggested the housing sector continues to recover despite a recent rise in mortgage costs. Economists have pointed to a stronger housing market as a bright spot in the U.S. economic rebound.

Prices in all 20 cities rose on a non-seasonally adjusted yearly basis, led by a 27.5 percent surge in Las Vegas and followed closely by a 24.8 percent gain in San Francisco.

Robert Shiller, one of the index's namesakes, said that Las Vegas figure gave him pause.

"I'm starting to worry about a bubble. In some cities it's looking bubbly now," Shiller told CNBC's "Squawk on the Street" Tuesday

"The really dramatic cities tend to be cities that had bubbles in the recent past - California, Phoenix, Vegas - It's regional somewhat. The northeast is relatively mild."

Shiller also cautioned the rally in prices could run out of steam soon.

"It might be slowing down, because the thing that's driving this doesn't seem to be excitement about a new era," he said. "It's a mixed picture and I don't know where home prices are going to go. This might be the beginning of a slowdown. It could be the beginning of a bubble."

Home resales jump to 6-1/2 year high as housing recovery rolls on

U.S. home resales hit a 6-1/2 year high in August as buyers flocked back to the market to lock in cheap borrowing costs amid rising mortgage rates, a signal of continued strength in the housing market recovery.

The National Association of Realtors said on Thursday existing home sales increased 1.7 percent to an annual rate of 5.48 million units last month, the highest level since February 2007 when property values began to decline after the sector's boom and bust.

Economists polled by Reuters had expected home resales to rise to a 5.25 million-unit rate. The housing recovery has helped shore up the economy by bolstering household finances and supporting consumer spending.

Lawrence Yun, NAR chief economist, said the housing market may be experiencing a temporary peak as would-be buyers sitting on the fence are pushed to close deals ahead of likely price and borrowing cost increases.

"Rising mortgage interest rates pushed more buyers to close deals, but monthly sales are likely to be uneven in the months ahead from several market frictions," he said, pointing to tight inventory limiting choices in many real estate pockets.

Mortgage rates have risen in recent months after hitting a low of 3.35 percent in May, according to data from Freddie Mac. The rate for a 30-year fixed rate loan was at 4.5 percent as of Sept. 19, hovering near a two-year high.

The Federal Reserve cited tighter financial conditions as one reason for its decision this week not to taper its stimulus program aimed at supporting growth, a surprise to investors and economists who had expected it to scale back bond-buying. Slower asset purchases would have pushed mortgage rates even higher.

Last month, the inventory of unsold homes on the market increased slightly and represented 4.9 months' supply at August's sales pace, the NAR said.

"There's an ongoing housing shortage," Yun said, adding: "I don't anticipate this housing shortage to go away."

The months' supply remained below the 6.0 months that is normally considered as a healthy balance between supply and demand. The U.S. housing market had been impacted by tight supplies in some parts of the country.

The median home sales price in August rose 14.7 percent from a year ago to $212,100.

Distressed properties, foreclosures and short sales, which typically occur at deep discounts, accounted for about 12 percent of overall sales last month, the lowest since NAR began tracking the data in 2008.

Investors bought 17 percent of homes in August, with first-time buyers accounting for 28 percent of the transactions.

Rising home values and mortgage interest rates have started to price some first-time buyers out of the housing market and affect affordability.