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Home Prices Climbed in Fewer U.S. Cities as Demand Cools

May 12 (Bloomberg) -- Prices for single-family homes climbed in 74 percent of U.S. cities in the first quarter, fewer than a year earlier, as the nation’s housing rebound cools.

The median transaction price rose from a year earlier in 125 of 170 metropolitan areas measured, the National Association of Realtors said in a report today. In the first quarter of last year, 89 percent of markets showed annual gains.

Housing demand has slowed in the past year as higher borrowing costs and price gains, fueled by tight inventory, reduce affordability. Completed purchases of previously owned U.S. homes fell for a third straight month in March to the slowest pace since July 2012, according to the Realtors group.

“The cooling rate of price growth is needed to preserve favorable housing affordability conditions in the future,” Chief Economist Lawrence Yun said in the statement. “Limited inventory is creating unsustainable and unhealthy price growth in some large markets, notably on the West Coast.”

The median price for a U.S. existing single-family house in the first quarter was $191,600, up 8.6 percent from a year earlier. Growth slowed from the last three months of 2013, when the median jumped 10.1 percent.

The best-performing areas were South Bend, Indiana, and Naples, Florida, where median prices jumped 27 percent. Prices climbed about 23 percent in Las Vegas; Lansing, Michigan; Atlanta; and Riverside, California.

The areas with the biggest declines were Cumberland, Maryland, where prices fell 19 percent from a year earlier. Following was the Springfield area of Illinois, with a 15 percent drop.

About 22 percent of U.S. areas had double-digit gains in prices, down from 26 percent in the fourth quarter, according to the Chicago-based Realtors group.

To contact the reporter on this story: Prashant Gopal in Boston at pgopal2@bloomberg.net

To contact the editors responsible for this story: Kara Wetzel at kwetzel@bloomberg.net Jeffrey St.Onge

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