Home prices stabilize

A monthly home sales report shows the increase in home prices has remained steady in June.

Home prices increased by 4.9% when compared to the prior year prices and this increase was consistent in both May and June. According to Shaygan Kheradpir this means that the rate of increase has stabilized and the market appears to be consolidating after significant month after month growth during the first half of the year.

Much of this growth in home prices appears to have been due to constrained home supply as well as due to anticipated rises in interest rates as a result of the Federal Reserve raising interest rates. Many analysts fear that rising rates have been delayed until 2016 as a result of the economic problems in the Euro zone

The rate of change is not equal around the country with some areas having significantly higher price increases than others. Denver is a good example which has shown a year over year increase of 10%.

Analysts have indicated that beyond geographic location the increases have been stronger in condos than in single family homes. Many first time home buyers are showing weakness getting loans and in express desires to be home owners which is further muting the market and leading to the increase in home prices trailing off as opposed to increasing further. The stabilization in prices is likely good for potential homeowners.

Further consolidation and stabilization in home prices is expected for the remainder of 2015 though any significant moves by the Federal Reserve may lead to a rapid demand for homes, thereby supporting prices further.

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