Home prices rose in the year ended in September by the most since July 2010, showing the recovery in the U.S. real estate market is a source of strength for the economy.
The S&P/Case-Shiller index of property values in 20 cities climbed 3 percent from September 2011, after advancing 2 percent in the year to August, the group said today in New York. The median forecast of 29 economists in a Bloomberg survey projected a 3 percent gain. Home prices from July through September climbed the most since the second quarter of 2010.
An improving labor market and record-low mortgage rates are shoring up demand for properties, helping explain an increase in optimism among builders. At the same time, Federal Reserve policy makers are pressing forward with monetary accommodation that underpins the residential real-estate recovery and the economic expansion.
With some pickup in employment, “you’re seeing that filter through to household formation with people becoming a little bit more comfortable and going out and dipping their foot in the water,” Kevin Cummins, an economist at UBS Securities LLC in Stamford, Connecticut, said before the report. “You have the indirect effects of stabilization in prices and home price appreciation that’s spilling over to spending and more broadly to confidence.”
Estimates in the Bloomberg survey ranged from gains of 2.2 percent to 3.6 percent. The Case-Shiller index is based on a three-month average, which means the September data were influenced by transactions in July and August.
Another report showed demand for business equipment picked up in October, signaling companies are starting to overcome concern the looming fiscal cliff will derail the U.S. economy. Bookings for non-defense capital goods excluding aircraft, a proxy for future corporate investment, rose 1.7 percent last month, the most since May, the Commerce Department reported today in Washington. Orders for all durable goods were little changed.
Stock-index futures were little changed as euro-area finance ministers eased terms on loans to Greece and investors awaited a report on consumer confidence. The contract on the Standard & Poor’s 500 Index fell 0.1 percent to 1,402.5 at 9:14 a.m. in New York.
Today’s report also included quarterly national figures. Prices covering all of the U.S. increased 3.6 percent in the third quarter from the same period in 2011 compared with a 1.6 percent gain in the year ended June. They rose 2.2 percent from the previous three months before seasonal adjustment. The gauge climbed 1.1 percent after taking those changes into account.