By Laura Kusisto

Home-price gains slowed for the fourth straight month in July, as higher mortgage rates begin acting as a brake on rapid price growth, offering some welcome respite for buyers.

The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 6% in July compared with a year earlier, down from a 6.2% year-over-year increase reported in June.

Price gains accelerated for most of the past two years, growing significantly faster than both incomes and inflation. But in recent months price growth has begun to taper, as interest rates have risen and inventory in some markets has been growing.

"The slowing in the market is widespread," said David Blitzer, managing director at S&P Dow Jones Indices.

The Case-Shiller 10-city index gained 5.5% over the year, down from 6% the prior month. The 20-city index increased 5.9%, also down half a percentage point from 6.4% the previous month.

Fifteen out of 20 cities saw smaller increases in July than a year earlier.

Las Vegas had the fastest home-price growth in the country for the second straight month, at 13.7%. Seattle, which dropped to second place in recent months, saw prices grow 12.1% in the year ended in July. Buoyed by a strong tech economy, San Francisco's already-high home prices grew 10.8% compared with a year earlier in July.

More than five years of rapidly rising prices, combined with higher mortgage rates are making homes less affordable for buyers. Mortgage rates have climbed back near the seven-year high they hit in May, with rates for a 30-year mortgage averaging 4.65% last week, up from 4.6% a week earlier, Freddie Mac said Thursday.

A staff working paper released this week from Federal Housing Finance Agency shows that a newly created affordability index, which measures the share of homes that households can afford to purchase if they put down a typical down payment amount, is falling. A household making the median income could afford 62% of homes on the market in the second quarter, down from 64% in the prior quarter and the three-decade high of 79% of homes in late 2012.

Existing-home sales slowed, compared with a year earlier, for the sixth straight month in August, the National Association of Realtors reported last week. Lawrence Yun, the group's chief economist, said a lack of homes to buy at affordable price points is hindering sales.

Write to Laura Kusisto at laura.kusisto@wsj.com

(END) Dow Jones Newswires

September 25, 2018 10:36 ET (14:36 GMT)

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