Home prices climb by most in six years as U.S. market firms

New York

New York was the only city to show decreases both month-to-month and year-to-year. Over the 12-month period, values in the city decreased 1.2%.

“Housing is clearly recovering,” David Blitzer, chairman of the S&P index committee, said in a statement. “These figures confirm that housing is contributing to economic growth.”

Combined sales of new and previously owned properties last year rose 9.9%, the biggest annual gain since 1998, data showed last week.

Purchases of previously-owned homes, which unexpectedly fell in December, were constrained by a lack of houses available for sale, the National Association of Realtors reported. Some 1.82 million existing homes were on the market last month, the fewest since January 2001, according to the group.

Lennar Corp., the largest U.S. homebuilder by market value, reported fiscal fourth-quarter earnings that beat analysts’ estimates as revenue jumped 42%. Stuart Miller, chief executive officer of the Miami-based company, said “a long-term demographic need for housing” is driving the housing recovery, which also is bolstering prices.

‘Pent-Up Demand’

As “pent-up demand unwinds, homebuilders are gaining pricing power,” Miller said on a Jan. 15 earnings conference call. “After years of home prices falling, in 2012 the trend turned positive, initially stabilizing and then allowing for price increases across the country.”

D.R. Horton Inc., the largest U.S. homebuilder by volume, said today that fiscal first-quarter profit more than doubled as demand for new houses climbed. Orders jumped 39 percent to 5,259 homes. The company’s contract backlog, an indication of future sales, rose 80% to $1.76 billion.

“We experienced broad improvement in demand in most of our markets this quarter, and we significantly increased our investments in homes under construction, finished lots, land and land development to capture this increasing demand,” Chairman Donald R. Horton said in a statement.

Low borrowing costs are helping buyers who qualify for financing. The average rate on a 30-year fixed mortgage was at 3.42% last week, close to the 3.31% in November that was the lowest in data going back to 1972, according to McLean, Virginia-based Freddie Mac.

The fiscal pact passed by Congress on Jan. 1, while avoiding sweeping tax increases, let the payroll tax used to pay for Social Security benefits return to the 2010 level of 6.2% from 4.2%. That reduces the paycheck by about $83 a month for someone who earns $50,000.

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