NEW YORK CITY—The trend toward slower gains in home pricing continues, with S&P Dow Jones Indices reporting Tuesday that 19 of the 20 cities in the S&P/Case-Shiller 20-City Composite saw lower annual returns in July. The S&P/Case-Shiller US National Home Price Index, which covers all nine US census divisions, recorded a 5.6% annual gain for the month, while the 10- and 20-City Composites each posted year-over-year increases of 6.7%.

“The broad-based deceleration in home prices continued in the most recent data” says David Blitzer, chairman of the index committee at S&P Dow Jones Indices. Even so, “home prices continue to rise at two to three times the rate of inflation. The slower pace of home price appreciation is consistent with most of the other housing data on housing starts and home sales.” He adds that the rise in August new home sales, which are not covered by the S&P/Case-Shiller indices, provides “a welcome exception to recent trends.”

Blitzer adds that although year-over-year figures are trending downward, “home prices are still rising month-to-month although at a slower rate than what we are used to seeing over the past couple of years. The National Index rose 0.5%, its seventh consecutive increase. At the bottom was San Francisco with its first decline this year and the only city in the red. New York tended to underperform over the past few years, but it was on top for the past two months.”

While all cities continue to continue to post year-over-year gains, not one managed to show improvement from June's figures. San Francisco decelerated the most from an annual return of +13.2% last month to +10.3% in July. Cleveland remained steady at +0.9% Y-O-Y and continued to underperform the other MSAs by a wide margin.

While San Francisco declined 0.4% between June and July, the rest of the cities saw monthly gains ranging from 0.1% to 1.1%. Miami was the only city to show improvement in its monthly gain, rising from +0.6% in June to +0.8% in July. Charlotte and Cleveland remained at 0.4% and 0.5%, respectively. Dallas and Denver continue to set new peaks, while Detroit remains the only city below its January 2000 value.

Las Vegas, one of the most depressed housing markets in the recession, is still showing the greatest Y-O-Y gains with 12.8% reported for July. By contrast, Phoenix, the first city to see double-digit gains back in 2012, posted for July its lowest annual return, 5.7%, since February of that year.

Patrick Newport and Stephanie Karol, US economists at IHS Global Insights, see an upside to the slower gains in pricing. “The good news is that this pace of growth indicates that home prices continue to be driven by fundamentals in the majority of these cities: in the three months ended July, seasonally-adjusted inventories of existing homes expanded 5.3% year-on-year, the largest such gain since 2011,” they wrote Tuesday.

Furthermore, “yearly home price gains continue to outpace PCE inflation in all of the 20 cities except Cleveland,” Newport and Karol wrote. Given that the Bureau of Labor Statistics has reported improvements recently in the local labor markets for most of the 20 cities, “the moderation in price growth may enable additional purchasing later this year.”