WASHINGTON – Home prices in 20 U.S. cities climbed at a faster pace than forecast in the year that ending in February, a sign the housing industry may be gaining momentum amid low borrowing costs and continued job growth.
The S&P/Case-Shiller index of property values increased 5 percent from February 2014, the biggest year-to-year gain since August, after rising 4.5 percent in the year that ended in January, the group said. The median projection of 28 economists surveyed by Bloomberg called for a 4.7 percent year-over-year advance. Nationally, prices rose 4.2 percent.
Higher real estate prices may persuade more homeowners to put their properties on the market, boosting the limited inventory that’s been holding some prospective buyers back. More supply, in addition to continued gains in the labor market and looser lending standards, will be needed to help the housing market accelerate after showing inconsistent progress.
“There’s a combination of factors that are pushing prices higher. One is that there’s some demand for housing, and also, there hasn’t been much of a rise in inventory,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York and the best forecaster of home-price changes over the past two years, according to data compiled by Bloomberg. “Prices are rising moderately, and we’ll probably continue to see that for the rest of the year.”
Economists’ estimates in the Bloomberg survey ranged from gains of 4.4 percent to 5.3 percent. The S&P/Case-Shiller index is based on a three-month average.
Home prices in the 20-city index adjusted for seasonal variations increased 0.9 percent in February for a third consecutive month. The Bloomberg survey median called for a 0.7 percent gain.
All 20 cities in the index showed a year-over-year increase, led by gains of 10 percent in Denver and 9.8 percent in San Francisco. Washington showed the smallest increase of 1.4 percent.
The year-over-year gauge, which uses records dating back to 2001, provides better indications of trends in prices, according to the S&P/Case-Shiller group. The panel includes Karl Case and Robert Shiller, the economists who created the index.
Year-over-year gains in property values accelerated in 17 cities in February compared with the prior month. San Diego, Las Vegas and Portland, Oregon, decelerated. Prices in two cities, Denver and Dallas, have surpassed their pre-recession peaks.
