Home prices climbed more than forecast in the 12 months through April, rising by the most in more than seven years and showing further strength in the U.S. housing market.
The S&P/Case-Shiller index of property values increased 12.1% from April 2012, the biggest year-over-year gain since March 2006, after advancing 10.9% a month earlier, a report showed today in New York. The median forecast in a Bloomberg survey of 28 economists Bloomberg called for a 10.6% advance.
Short supply, record-low mortgage rates and an improving job market combined to boost housing demand and spark the rebound in prices. The recovery is probably far enough along to overcome the recent surge in borrowing costs after Federal Reserve policy makers said they may trim unprecedented accommodative measures meant to spur the expansion.
“Housing’s doing really well and I don’t think the backup in mortgage rates to date is going to derail it,” said Brian Jones, senior U.S. economist in New York at Societe Generale, who projected a 12.3% rise in home prices. “We’re still well off the highs, but price increases could continue for the next several years.”
Bloomberg survey estimates ranged from increases of 9.9% to 12.3%. The S&P/Case-Shiller index is based on a three- month average, which means the April data were influenced by transactions in February and March.
Home prices adjusted for seasonal variations increased 1.7% in April, compared with a 1.9% gain in March. The Bloomberg survey median called for a 1.2% rise. Unadjusted prices climbed 2.5% in April after a 1.4% gain as 19 of the 20 cities showed advances.
The year-over-year gauge, which includes records going back to 2001, provides a better indication of price trends, the group has said.
All of the 20 cities in the index showed an increase in year-over-year prices, led by gains of 23.9% in San Francisco and 22.3% in Las Vegas. The smallest gain was in New York, which showed a 3.2% advance.
“The recovery is definitely broad-based,” David Blitzer, chairman of the S&P index committee, said in a statement. “Recent economic data on home sales and inventories confirm the housing recovery’s strength.”
The price index results follow other signs that housing has strengthened in the second quarter even as the economy shows signs of slowing. Beginning construction of new homes climbed last month as permits to build single-family houses rose to the highest level since May 2008, the Commerce Department reported June 18.