Residential real-estate prices increased in February by the most since May 2006, showing the U.S. housing market is strengthening.
The S&P/Case-Shiller index of property values in 20 cities rose 9.3% from February 2012, more than forecast, after advancing 8.1% in the year ended in January, the group said today in New York. The increase exceeded the 9% median forecast in a Bloomberg survey. Compared with the prior month, prices rose the most since October 2005.
Further price gains may help alleviate a lack of housing inventory by encouraging more homeowners to put their properties on the market. At the same time, mortgage rates close to all-time lows and an improving labor market are providing a boost for residential real estate, which is a source of strength for the expansion.
“The recent run up in prices probably has a lot to do with the lack of supply,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “The more attention that home price gains get, more and more people will realize it’s a good time to sell their home.”
Estimates for the year-over-year price change ranged from increases of 8.5% to 9.3%, according to the 27 economists surveyed. The Case-Shiller index is based on a three-month average, which means the February figure was influenced by transactions in January and December.
Stock-index futures were little changed after the figures, with the contract on the Standard & Poor’s 500 Index expiring in June falling 0.1% to 1,587.2 at 9:29 a.m. in New York.
Home prices adjusted for seasonal variations rose 1.2% in February from the prior month after climbing 1% in January. Las Vegas showed the biggest adjusted monthly increase, with prices climbing 2%. San Francisco, Phoenix and Los Angeles home prices advanced 1.8%.
Unadjusted prices climbed 0.3 last month from February as 11 of 20 cities showed increases.
The year-over-year gauge provides better indications of trends in prices, according to the S&P/Case-Shiller group. The panel includes Karl Case and Robert Shiller, the economists who created the index.
For a second straight month, all 20 cities in the index showed a year-over-year increase. Phoenix showed the biggest year-over-year increase, with prices jumping 23% in the 12 months to February. Home values in San Francisco advanced 18.9%, while in Las Vegas, they were up 17.6%.