Home prices in 20 U.S. cities rise most since February 2006

Monthly Gain

Home prices adjusted for seasonal variations increased 1% in September from the previous month, compared with a 0.9% gain in August. The Bloomberg survey median called for a 0.9% rise. Unadjusted prices climbed 0.7% in September after a 1.3% 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 29.1% in Las Vegas and 25.7% in San Francisco. The smallest gain was in New York, which showed a 4.3% advance.

Monthly figures show price increases were slowing in parts of the country, including Las Vegas, Los Angeles, Tampa and San Diego.

“Other data suggest a market beginning to shift to slower growth rather than one about to accelerate,” David Blitzer, chairman of the S&P index committee, said in a statement. “Existing-home sales weakened in the most recent report, home construction remains far below the boom levels of six or seven years ago and interest rates are expected to be higher a year from now.”

Existing Homes

Purchases of previously owned homes fell in October to a 5.12 million annual rate, the lowest level in four months, according to the National Association of Realtors. The median price of existing property increased 12.8% in October from the year before, to $199,500, the figures showed.

Contract signings for the purchase of previously owned homes fell for a fifth straight month in October, the group’s data showed yesterday.

Borrowing costs have climbed from record lows. The average rate on a 30-year fixed mortgage was 4.22% in the week ended Nov. 21, up from 3.31% last November, the lowest in records dating to 1972.

Builder Sentiment

The National Association of Home Builders/Wells Fargo index of builder sentiment held in November at a four-month low.

“For the Fed, while rising prices will be taken as a positive for spending activity, the souring tone in sales activity will provide some cause for concern about the sustainability of the recovery and price gains in this crucial sector of the economy,” Millan Mulraine, director of U.S. rates research at TD Securities USA LLC in New York, said in a note to clients.

While policy makers probably won’t be dissuaded from easing their $85 billion in monthly asset purchases by a slowdown in housing, “it is likely add to the debate on providing stimulus through other non-quantitative approaches,” Mulraine wrote.

Strength in the housing market this year has benefited companies including Williams-Sonoma Inc., which sells home goods and furniture.

“We do believe that people feel better about spending money on their home because the value of their homes are no longer dropping,” chief executive officer Laura Alber said in a Nov. 20 conference call. “I think it’s probably early innings of housing recovery.”

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