U.S. home prices climbed a robust 6.2 percent from a year ago, amid strong demand from would-be buyers and a shrinking supply of properties for sale.

Standard & Poor's said Tuesday that its S&P CoreLogic Case-Shiller national home price index stood in October a solid 6 percent above its previous 2006 peak. Prices are rising at more than double the pace of wage growth, creating some affordability pressures that have been offset by relatively low mortgage rates.

Metro areas with booming job markets and the steepest home price gains could see more residents staying as renters, the Associated Press reported.

"Since home prices are rising faster than wages, salaries, and inflation, some areas could see potential home buyers compelled to look at renting," said David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.

The strongest annual gains occurred in Seattle, where prices have shot up 12.7 percent since October 2015. Las Vegas has seen prices increase 10.2 percent, while San Diego notched growth of 8.1 percent. Of the 20 metro areas tracked by the index, Washington, DC reported the smallest price gain with 3.1 percent.

As the economy has steadily recovered from the 2008 financial crisis, demand from would-be buyers has steadily improved. The 17-year low unemployment rate of 4.1 percent has left more Americans confident enough to put bids on homes. Sales of existing homes in November reached their strongest pace since December 2006, according to the National Association of Realtors. But the sales growth hasn't compelled more people to list their homes for sale, as the number of properties on the market has tumbled nearly 10 percent in the past 12 months.

Mortgage giant Freddie Mac said last week that the rate on 30-year fixed-rate mortgages averaged 3.94 percent, down from 4.30 percent a year ago.

Key Takeaways

A lingering shortage of previously owned homes is keeping housing prices elevated, Bloomberg reported.

That’s allowed homeowners to recover the equity lost during the housing collapse and recession a decade ago. Sales, meanwhile, are strengthening as the labor market remains robust and borrowing costs stay close to historically low levels.

For those looking to buy for the first time, conditions are less favorable. Growth in property values is outpacing wage gains and limiting affordability, representing a headwind for the market.

Economist Views

“Home prices continue their climb supported by low inventories and increasing sales,” David Blitzer, chairman of the S&P index committee, said in a statement. But that climb may be interrupted by the Federal Reserve hiking interest rates next year, he said. “Since home prices are rising faster than wages, salaries, and inflation, some areas could see potential homebuyers compelled to look at renting."

Other Details

• All 20 cities in the index showed year-over-year gains, led by a 12.7 percent increase in Seattle and a 10.2 percent advance in Las Vegas
• After seasonal adjustment, Las Vegas had the biggest month-over-month rise at 1.4 percent, followed by San Francisco with a 1.2 percent increase
• Home prices rose 0.1 percent in Miami from the prior month, marking the smallest advance of all cities