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Home Prices See Biggest Gain in 7 Years

But rising mortgage interest rates could cool the market


house on stack of money 630The U.S. housing market continued to show vigorous growth over the summer.

According to the S&P/Case-Shiller index, in July, home prices in 20 major metropolitan areas jumped 12.4% over the same period last year. The price surge marked the largest yearly price increase since February 2006, Bloomberg notes.

Steve Jobs’ Childhood Home May Become Historical Site
Steve Jobs’ Childhood Home May Become Historical Site

It was also in line with economists’ forecasts.

Month-over-month price gains were not as dramatic. Las Vegas topped the list with a 2.5% monthly gain in home prices. By contrast, compared to June, home prices slipped in Cleveland and Minneapolis. Las Vegas also showed the largest year-over-year jump, with home prices surging 27.5% from July 2012.

California cities also showed strong price rises, including Los Angeles, San Diego and San Francisco.

While home prices moved up sharply over the past year, industry experts expect the trend to cool as mortgage interest rates rise, reducing the number of new home buyers in the market.

The news sent homebuilder stocks soaring. Shares of Ryland Group (RYL) jumped more than 7% in Monday mid-day trading, while Toll Brothers (TOL) and DR Horton (DHI) each rose around 4%.

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