US house prices in biggest annual rise for seven years

House in Encinitas, California California is among the states leading the housing recovery

US house prices rose 12.4% over the 12 months to the end of July, the biggest annual increase since February 2006, according to a closely-watched measure.

The rise was revealed in the latest S&P/Case-Shiller Home Price Index.

The index measures single-family home prices across 20 cities, with 13 cities showing a rising annual growth rate.

Last week, the US Federal Reserve decided to maintain its effort to boost the economy, which involves buying $85bn worth of assets every month.

That scheme, known as quantitative easing (QE), is credited with boosting the housing market last year by driving down mortgage rates to record lows.

However, David Blitzer from S&P Dow Jones Indices said that effect had worn off.

"Following the increase in mortgage rates beginning last May, applications for mortgages have dropped, suggesting that rising interest rates are affecting housing.

"The Fed's announcement last week that QE3 bond buying will continue for the time being may have only a limited, though favourable, impact on housing," he said.

Prices rose 0.6% on a seasonally adjusted basis in July compared with the month before, which was lower than analysts' forecasts and down from June's increase of 0.9%.

Regaining ground

Las Vegas saw the biggest annual gain of 27.5%, while San Francisco, Los Angeles and San Diego all saw rises of more than 20%.

But the survey points out that house prices in those cities are still well below the peaks hit before the 2008 financial crisis.

Of the 20 cities surveyed, New York saw the lowest annual increase of 3.5%.

Detroit, which filed for bankruptcy in July, saw an annual growth rate of 16.9%. However, the report says that Detroit is the only city where house prices are still below the levels reached in January 2000.

More on This Story

US Economy

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features

  • Image of Ankor Wat using lidarJungle Atlantis

    How lasers have revealed an ancient city beneath the forest


  • Peaky Blinders publicity shotBrum do

    Why is the Birmingham accent so difficult to mimic?


  • Agents with the US Secret Service, such as this one, are responsible for guarding the presidentGuarding the guards

    White House break-in adds to Secret Service woes


  • Serhiy Hordiychuk fighting in eastern UkraineNew battle

    Ukraine's wounded forced to fight for artificial limbs


From BBC Capital

Programmes

  • Islamic StateClick Watch

    Can the location of Islamic State militants be found with open source data?

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.