The S&P/Case-Shiller home price index for June posted another month of solid gains, but not on the same pace as the record-setting rise in May. The 20-city composite rose 12.1% year-over-year, just a tick below the consensus estimate for a gain of 12.2%, which also happened to be the record May rate. The 10-city index rose 11.9% year-over-year in June.

The index tracks prices on a three-month rolling average. The June figures represent the three-month average of April, May and June prices.

On a month-over-month basis, June prices were up 2.2% on the 10-city composite index and 2.2% on the 20-city composite. House prices in Dallas and Denver set new record highs in again in June. All 20 cities in the index posted gains on a monthly and annual basis.

The chairman of the S&P index committee said:

Overall, the report shows that housing prices are rising but the pace may be slowing. Thirteen out of twenty cities saw their returns weaken from May to June. As we are in the middle of a seasonal buying period, we should expect to see the most gains. With interest rates rising to almost 4.6%, home buyers may be discouraged and sharp increases may be dampened.

Among equities tied to home building, none is reacting particularly well to today’s report. The uncertainty about a U.S. response to Syria is the likely reason, because this report is pretty strong.

Home Depot Inc. (NYSE: HD) shares are down 0.0% in premarket trading Tuesday to $74.75, even after a big quarter and company management’s boost to guidance. The stock’s 52-week range is $56.20 to $891.56.

Lowe’s Companies Inc. (NYSE: LOW) posted even better results than Home Depot last quarter, but shares are down 1.2% this morning, at $46.41 in a 52-week range of $27.66 to $47.51. The home improvement business should be able to fight off the effects of rising interest rates better than the new home builders.

Shares of Toll Brothers Inc. (NYSE: TOL) are down nearly 2% shortly after the open, and KB Home (NYSE: KBH) is down about 1.6%. Rising interest rates are not helping the home builders, but rate increases are slowing.

Toll Brothers’ CEO said in last week’s earnings release:

Sales volumes and pricing power both increased this quarter from one year ago, a pattern consistent with recent quarters. We believe the recovery is real and we are in the early stages of the rebound.

The recovery may be real, but it is stalling a bit today. The iShares Dow Jones U.S. Home Construction (NYSEMKT: ITB) is down 1.3%, at $20.92 in a 52-week range of $17.67 to $26.21.

The housing market is really in better shape than the share prices look today. But threats of military action trump a lot of things.

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