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 percent from August 2012, more than forecast, after a 12.3 percent 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 percent advance.
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.
“There’s still decent enough demand with little supply so home prices continue to perform,” Kevin Cummins, an economist at UBS Securities LLC in Stamford, Connecticut, said before the report. “It’s unclear how much rising mortgage rates in the last few months slow housing sales in the near future.”
As of August, average home prices in the U.S. were back to their mid-2004 levels, and the 20-city index was up 22.7 percent from its March 2012 low.
Another report today showed retail sales excluding motor vehicles rose 0.4 percent in September after a 0.1 percent 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 percent, 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 percent to 1,761.1 at 9:07 a.m. in New York.
Estimates in the Bloomberg survey ranged from year-over-year home-price gains of 11.6 percent to 12.9 percent. 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 percent.
Home prices adjusted for seasonal variations rose 0.9 percent in August from the prior month after a 0.6 percent increase. That compares with the Bloomberg survey median of a 0.7 percent increase.
“The monthly percentage changes for the 20-city composite show the peak rate of gain in home prices was last April,” David Blitzer, chairman of the S&P index committee, said in a statement. “Since then home prices continued to rise, but at a slower pace each month. Recent increases in mortgage rates and fewer mortgage applications are two factors in these shifts.”
Unadjusted prices climbed 1.3 percent in August from the previous month.
The year-over-year gauge, which uses records dating back to 2001, provides a better indication of price trends, according to Karl Case and Robert Shiller, creators of the index. Earlier this month, Shiller was one of three economists awarded the 2013 Nobel Prize in Economic Sciences for research on how financial markets work and assets such as stocks are priced.