NEW YORK – Housing prices in 20 U.S. cities accelerated more than forecast in October, rising by the most since mid-2014 as lean inventories continued to prop up values amid steady demand, S&P CoreLogic Case-Shiller data showed on Tuesday.
Highlights of home prices (October)
- The 20-city property values index increased 6.4 percent year over year (est. 6.3 percent), the biggest gain since July 2014
- National home-price gauge rose 6.2 percent year over year, the most since June 2014
- Seasonally adjusted 20-city index advanced 0.7 percent for the month (est. 0.6 percent)
Key takeaways
A lingering shortage of previously owned homes is keeping housing prices elevated. That’s allowed homeowners to recover the equity lost during the housing collapse and recession a decade ago. Sales, meanwhile, are strengthening as the labor market remains robust and borrowing costs stay close to historically low levels.
For those looking to buy for the first time, conditions are less favorable. Growth in property values is outpacing wage gains and limiting affordability, representing a headwind for the market.
Economist views
“Home prices continue their climb supported by low inventories and increasing sales,” David Blitzer, chairman of the S&P index committee, said in a statement. But that climb may be interrupted by the Federal Reserve hiking interest rates next year, he said. “Since home prices are rising faster than wages, salaries, and inflation, some areas could see potential homebuyers compelled to look at renting.”
Other details
- All 20 cities in the index showed year-over-year gains, led by a 12.7 percent increase in Seattle and a 10.2 percent advance in Las Vegas
- After seasonal adjustment, Las Vegas had the biggest month-over-month rise at 1.4 percent, followed by San Francisco with a 1.2 percent increase
- Home prices rose 0.1 percent in Miami from the prior month, marking the smallest advance of all cities.
The index accounts for properties in Boston, Chicago, Denver, Las Vegas. Los Angeles, Miami, New York, San Diego, San Francisco. Washington D.C. Atlanta, Charlotte, N.C., Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland, Ore., Seattle and Tampa, Fla.
Katia Dmitrieva is a reporter for Bloomberg News.
