Home prices in 20 U.S. cities climbed more than forecast in September from the same month last year, signaling residential real estate is sustaining momentum.
The 5.5 percent increase in the S&P/Case-Shiller index of property values was the biggest year-over-year gain since August 2014 and followed a 5.1 percent advance in the previous month, the group said Tuesday. The median estimate of economists surveyed by Bloomberg called for a 5.2 percent increase. Nationally, prices rose 4.9 percent.
A limited supply of homes on the market is supporting price appreciation amid steady demand. Joblessness at its lowest level since 2008 and the prospects for a bigger pickup in wage gains should buoy residential real estate even as borrowing costs are poised to pick up as the Federal Reserve considers raising its benchmark interest rate.
“You still have constrained inventory and you don’t really have a whole lot coming on board unless construction picks up markedly,” Gennadiy Goldberg, a U.S. rates strategist for TD Securities LLC in New York, said before the report. “Housing is muddling along -- very slow, very gradual improvement, which is OK for now.”
Economists’ estimates in the Bloomberg survey ranged from gains of 4.9 percent to 5.7 percent. The S&P/Case-Shiller index is based on a three-month average, which means the September figure also was influenced by transactions in August and July.
Home prices in the 20-city index adjusted for seasonal variations increased 0.6 percent in September from the prior month, twice as much as the 0.3 percent median projection in the Bloomberg survey and the biggest gain since March.
All 20 cities in the index showed a year-over-year gain, led by an 11.2 percent increase in San Francisco and a 10.9 percent advance in Denver. Chicago, where prices climbed 1.1 percent, registered the smallest 12-month increase.
The price increases accelerated in 17 cities in September from the same time in 2014 compared with the year ended in August.
The year-over-year gauge, based on records dating back to 2001, provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.