Home prices in 20 U.S. cities rose in November from a year earlier by the most in more than six years, indicating the U.S. housing rebound is gaining ground.
The S&P/Case-Shiller index of property values increased 5.5% from November 2011, the biggest year-over-year gain since August 2006, a report showed today in New York. The median projection of 30 economists surveyed by Bloomberg called for a 5.6% advance.
Mortgage rates near a record low are propelling demand for real estate that’s outpacing the available supply, a sign prices will keep strengthening. Home-equity gains and an improving job market may help to put a floor under Americans’ confidence and spending, the biggest part of the economy, cushioning the hit from a higher payroll tax that began in January.
“With inventory of both new and existing homes still very low, prices will likely continue to rise,” Ian Shepherdson, chief economist at Pantheon Macroeconomics Advisors Inc. in White Plains, New York, said in a note to clients. “Each successive price increase adds more weight to the idea that the housing market is recovering, and nothing pulls people into the market faster than the thought that prices will rise further.
Stock-index futures held earlier losses after the report. The contract on the Standard & Poor’s 500 Index maturing in March dropped 0.2% to 1,493.5 at 9:12 a.m. in New York.
Bloomberg survey estimates ranged from 3.4% to 6.4%. The S&P/Case-Shiller index is based on a three-month average, which means the November data were influenced by transactions in October and September.
The October reading was revised to show a 4.2% year-to-year advance from a previously reported 4.3% gain.
Home prices adjusted for seasonal variations climbed 0.6% in November from the prior month, matching October’s increase. That compares with the Bloomberg survey median of a 0.7% rise.
The month-over-month gain was led by San Francisco, followed by Minneapolis.
Unadjusted prices in the 20 cities fell 0.1% in November from the previous month. Property values typically fall during this time of year.
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. Year-over-year records began in 2001.
Nineteen of the 20 cities in the index showed a year-over-year gain, led by a 22.8% jump in Phoenix and a 12.7% increase in San Francisco.