Home Prices Rise the Most in Seven Years

From Bloomberg:

Home prices in 20 U.S. cities rose in October from a year ago by the most in more than seven years, signaling the real-estate rebound will keep bolstering household wealth in 2014.

The S&P/Case-Shiller index of property prices in 20 cities climbed 13.6 percent from October 2012, the biggest 12-month gain since February 2006, after a 13.3 percent increase in the year ended in September, a report from the group showed today in New York. The median projection of 22 economists surveyed by Bloomberg called for a 13.5 percent advance.

A dwindling inventory of foreclosed properties has helped restrict the supply of homes for sale, pushing up prices even as higher mortgage rate cool demand. The real-estate market will probably get its next boost from gains in employment that are lifting consumer confidence in the economic expansion.

“Prices are mostly being supported by a slower rate of foreclosures, smaller share of distressed housing transactions and low levels of inventories,” Ryan Wang, an economist at HSBC Securities USA Inc. in New York, said before the report. “We’ll see a smaller increase in 2014, but low inventory levels should help prices recover a bit more.”

The folks inside the Fed are certainly paying attention. What’s remarkable is that home values are rising as the average mortgage rate has jumped from 3.35% to 4.48% in the past year.

Posted by on December 31st, 2013 at 11:33 am

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