All 20 cities in the index showed a year-over-year increase, led by a 23.2% surge in Phoenix. The change in home prices in New York, up 0.6%, turned positive after declining during the previous 28 months.
“Economic data continue to support the housing recovery,” David Blitzer, chairman of the S&P index committee, said in a statement. “Steady employment and low borrowing rates pushed inventories down to their lowest post-recession levels.”
There were 1.77 million previously-owned properties on the market in January, the fewest since 1999, according to data from the National Association of Realtors. The supply of homes for sale rose to 1.94 million in February, more than a million units less than the average in the five years leading to the 2007-2009 recession.
Price data from the NAR showed the median value of a previously-owned home climbed to $173,600 in February, up 11.6% from the same month in 2012 and the biggest gain since November 2005. Lawrence Yun, NAR’s chief economist, estimated home price increases will boost household wealth by as much as $1.7 trillion in 2013.
Other indicators also show home values are on the rise. Real estate prices advanced 6.5% in the year through January, the Federal Housing Finance Agency said on March 21.
Increased demand may further propel prices higher, encouraging others to join the market to take advantage of cheap mortgage rates. The average rate on a 30-year fixed loan dropped to 3.54% last week, compared with 4.08% a year ago, according Freddie Mac. The 30-year rate reached a record- low 3.31% in November.
“We feel really good this spring,” Doug Yearley, chief executive officer of homebuilder Toll Brothers Inc., said during a March 20 interview on Bloomberg Radio. “Demand is back. We’ve had so many people on the sidelines for five years. They’re all coming back out, taking advantage of these great interest rates. It’s the early stages of recovery but it feels pretty solid.”
“One of the most powerful tools we have is bringing down mortgage rates and stimulating home buying, construction, and related industries,” Federal Reserve Chairman Ben S. Bernanke said during a March 21 press conference. Financial institutions may have “gone too far” in setting requirements to obtain financing amid concerns about new regulations, he said. Banks “may have tightened the mortgage credit box more than would be desirable in a long-run, healthy economy.”