Home prices rose in the 12 months through March by the most in seven years as the recovery in residential real estate gained momentum.
The S&P/Case-Shiller index of property values increased 10.9% from March 2012, the biggest 12-month gain since April 2006, after advancing 9.4% in February, a report showed today in New York. The median projection of 30 economists surveyed by Bloomberg called for a 10.2% advance.
Property values may keep climbing as cheaper borrowing costs and gains in confidence lure buyers while the number of houses on the market remains near the lowest level in a decade. Rising prices are shoring up household finances, which could give a lift to sales at retailers including Williams-Sonoma Inc., and help builders such as PulteGroup Inc.
“We have a continued gradual recovery,” said Brian Jones, a senior U.S. economist for Societe Generale in New York, who projected a 10.6% increase, the highest forecast in the Bloomberg survey. “The data is solid.”
Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in June rose 0.9% to 1,665.1 at 9:15 a.m. in New York.
Bloomberg survey estimates ranged from increases of 9.3% to 10.6%. The S&P/Case-Shiller index is based on a three-month average, which means the March data were influenced by transactions in January and February.
February’s reading was revised from a previously reported 9.3% gain.
Today’s report also included quarterly figures for the market nationally. Prices covering all of the U.S. climbed 10.2% in the first quarter from the same period in 2012, compared with a 7.3% gain in the quarter ended December.
Home prices adjusted for seasonal variations increased 1.1% in March, compared with a 1.3 gain in February. The Bloomberg survey median called for a 1% rise.
Los Angeles, Seattle, Charlotte, North Carolina, Portland, Oregon, and Tampa, Florida, showed their biggest month-to-month gains in more than seven years.
The year-over-year gauge, which includes records going back to 2001, provides a better indication of price trends, the group has said.
All 20 cities in the index showed an increase in year-over- year prices, led by gains of 22.5% in Phoenix and 22.2% in San Francisco. The smallest gain was in New York, which showed a 2.6% advance.
The Case-Shiller index follows other reports this month that show continued strength in residential real estate. Sales of new homes climbed in April to an annual pace of 454,000, an increase of 2.3% from March and the second-highest level in almost five years, the Commerce Department reported last week. The median selling price jumped 14.9% from a year earlier to a record $271,600.
Purchases of previously owned homes also climbed, to a 4.97 million pace, the highest level in more than three years, according to the National Association of Realtors. The median price rose 11%, the fifth consecutive month that property values advanced more than 10% year over year.
“Other housing market data reported in recent weeks confirm these strong trends,” David Blitzer, chairman of the S&P index committee, said in a statement. “At the same time, the larger than usual share of multifamily housing, a large number of homes still in some stage of foreclosure and buying- to-rent by investors suggest that the housing recovery is not complete.”
The average rate on a 30-year fixed mortgage was 3.59% in the week ended May 23, down from 3.78% a year earlier, according for data from Freddie Mac. The rate reached a record low of 3.31% in November.
The housing recovery is giving consumers more confidence to spend, said Laura Alber, president and chief executive officer of Williams-Sonoma. The San Francisco-based company reported an 8.6% increase in net revenue in the three months ended May 5.
“We’re not sure whether there’s truly a housing recovery that’s going to be sustainable yet, but we are seeing that they are spending money to redecorate,” Alber said on a May 23 earnings call. “Whether they’re moving or not, it’s time to get some new stuff in your home after a period when I think people didn’t feel comfortable spending money on their homes.”