US economy boosted by rising home prices
HOME prices in 20 US cities rose in the 12 months to the end of July by the most in more than seven years.
The S&P/Case-Shiller index of property values in 20 cities rose 12.4pc from July 2012. On a month-to-month basis, price appreciation slowed.
Gains in home and stock values are contributing to increases in household wealth that are helping bolster consumer spending, the biggest part of the economy.
However, the appreciation in property values may cool over the rest of the year as mortgage rates, now close to a two-year high, temper demand.
Price increases "will start to slow down to a fairly sustainable pace", said Brian Jones, a senior US economist at Societe Generale in New York.
Another home-price gauge also showed improvement. Values climbed 1pc in July from the prior month after a 0.7pc increase in June, according to figures from the Federal Housing Finance Agency.
Consumer confidence in September dropped to a four-month low, another report showed. The Conference Board's sentiment index decreased to 79.7, the weakest since May, from a revised 81.8 in August, according to data from the New York-based private research group. The measure averaged 53.7 during the recession that ended in June 2009.
Stocks fell as investors weighed the data for signs on the economy's strength.
"More cities are experiencing slow gains each month than the previous month, suggesting that the rate of increase may have peaked," said David Blitzer, chairman of the S&P index committee.
All 20 cities showed a year-over-year gain, led by a 27.5pc surge in Las Vegas. San Francisco, Los Angeles and San Diego showed gains in excess of 20pc.
"The southwest continues to lead the housing recovery," said Mr Blitzer. (Bloomberg)