Home prices in the U.S. climbed more than forecast in July from a year earlier, adding to signs that housing will spur economic growth.
The S&P/Case-Shiller index of property values in 20 cities increased 1.2 percent from July 2011, the biggest 12-month advance since August 2010, a report from the group showed today in New York. The median forecast of 23 economists surveyed by Bloomberg called for a 1.1 percent gain.
The lowest mortgage rates on record are attracting buyers, helping absorb the supply of distressed properties that had depressed values. A stabilization in residential real estate may also be contributing to recent gains in consumer confidence that, combined with improving household wealth, will lead to a pickup in spending, the biggest part of the economy.
“We’re finally seeing a more sustained and broad-based improvement in home prices,” said Millan Mulraine, senior U.S. strategist for TD Securities in New York, who correctly projected the year-over-year increase. “The housing sector has made an important turn here, and that is being sustained.”
Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in December rose 0.3 percent to 1,455 at 9:28 a.m. in New York.
Estimates in the Bloomberg survey ranged from gains of 0.3 percent to 2.51 percent. The Case-Shiller index is based on a three-month average, which means the July data were influenced by transactions in May and June.
The 20-city index accelerated after showing a 0.6 percent advance in the year ended June. Year-over-year records began in 2001.
Home prices adjusted for seasonal variations increased 0.4 percent in July from the prior month. Unadjusted prices climbed 1.6 percent from the previous month as all 20 cities showed gains for a third consecutive month.
“All in all, we are more optimistic about housing,” David Blitzer, chairman of the S&P index committee, said in a statement. “Stronger housing numbers are a positive factor for other measures including consumer confidence.”
The year-over-year gauge provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.
Sixteen of the 20 cities in the index showed a year-over- year gain, led by a 17 percent increase in Phoenix.