“Home prices continue to show solid increases,” David Blitzer, chairman of the S&P index committee, said in a statement. “Housing continues to be one of the brighter spots in the economy.”
Demand that’s rising while inventories remain tight has exerted upward pressure on home values. There were 1.93 million previously-owned properties on the market last month, the fewest of any March since 2000, according to data from the National Association of Realtors.
Price figures from the NAR showed the median value of an existing home rose 11.8%, the most since November 2005, to $184,300 last month from $164,800 in March 2012.
Other indicators corroborate the NAR data. Property values climbed 10.2% in the 12 months through February, the most in almost seven years, according to Irvine, California-based CoreLogic Inc. Prices advanced 7.1% in the year through February, the most since 2006, the Federal Housing Finance Agency said on April 23.
“Demand for homes has strengthened and the relative available housing supply has shrunk, which has created a favorable pricing environment,” Donald Tomnitz, president and chief executive officer of homebuilder D.R. Horton Inc., said during an April 26 earnings call. Fort Worth, Texas-based D.R. Horton is the largest U.S. homebuilder by volume. “Our first- time buyer demand remains very strong, and we continue to see improving demand from move-up buyers.”
More sales could propel prices even higher, inducing others to join the market to take advantage of cheap mortgage rates before borrowing costs rise. The average rate for a 30-year fixed mortgage was 3.40% in the week ended April 25, down from 3.41%, according to Freddie Mac. In November, the rate reached an all-time low of 3.31%. The average 15-year rate dropped to a record-low 2.61%.
Higher home prices have also boosted household wealth, which will help underpin consumer spending, in turn, spur economic growth. Figures from the Federal Reserve show that the value of Americans’ real estate worth has climbed each quarter since July 2011.