POSTED: Tuesday, August 27, 2013 - 9:00am
UPDATED: Tuesday, August 27, 2013 - 9:04am
Steve Hargreaves NEW YORK (CNNMoney) — Home prices are still surging, but the pace of the gains has steadied as interest rates continue to rise.
Prices for homes in the nation's 20 largest cities in June rose 12.1% over the last year, according to a report Tuesday from S&P/Case-Shiller home price index.
While that gain is still robust, it didn't quite match the gain of 12.2% reported for May.
Rising mortgage rates may be to blame.
"With interest rates rising to almost 4.6%, home buyers may be discouraged and sharp increases may be dampened," David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a press release.
Mortgage rates have risen more than a full percentage point since May, when Federal Reserve chairman Ben Bernanke indicated the Fed may soon ease its bond buying program that's helped keep interest rates at record lows.
While some cheer the Fed stepping back from its unusual bond purchases amid fears the buying will spark inflation, some worry that it may be too soon.
The low interest rates have been a primary factor in driving up home prices, which in turn are credited with giving consumers confidence to go out and spend and drive a big part of the nation's fledgling economic recovery.