Home prices in 20 U.S. cities rose in August from a year ago by the most since February 2006 as stronger demand boosted values.
The S&P/Case-Shiller index of property prices in 20 cities increased 12.8% from August 2012, more than forecast, after a 12.3% gain in the year ended in July, a report from the group showed today in New York. The median projection of 28 economists surveyed by Bloomberg called for a 12.5% advance.
“You’ve got some momentum,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who forecast a 12.9% increase in home prices. “The more encouraging thing is not just that prices accelerated, every area reported higher selling prices. The breadth of the increase was across the entire country.”
Tight inventories have boosted prices as buyers compete for a limited number of properties for sale. While housing continues to be a source of strength for the economy, higher mortgage rates and limited improvement in the labor market and wages risk slowing the pace of progress.
As of August, average home prices in the U.S. were back to mid-2004 levels, and the 20-city index was up 22.7% from its March 2012 low.
Another report today showed retail sales excluding motor vehicles rose 0.4% in September after a 0.1% gain, indicating households were sustaining the economic expansion before the government shutdown this month shook confidence. The Commerce Department’s figures showed total sales dropped 0.1%, restrained by the biggest decrease at auto dealers since October 2012, as purchases early in the month were included in the August data.
Stock-index futures rose, after the Standard & Poor’s 500 Index climbed to a record, as Federal Reserve policy makers begin a two-day meeting. The contract on the S&P 500 expiring in December climbed 0.1% to 1,760.7 at 9:28 a.m. in New York.
Estimates in the Bloomberg survey ranged from year-over- year home-price gains of 11.6% to 12.9%. The S&P/Case-Shiller index is based on a three-month average, which means the August figure was influenced by transactions in July and June.
The July reading previously was reported as a year-over- year advance of 12.4%.