Home prices in 20 U.S. cities rose at the best pace in five months in October, posting a second straight acceleration as real estate markets showed fresh strength at the start of the fourth quarter.
The S&P CoreLogic Case-Shiller index of property values advanced 2.2% from October 2018, according to data released Tuesday that exceeded estimates in a Bloomberg survey of economists.
A separate report from the Federal Housing Finance Agency showed home prices increased 0.2% in October from a month earlier after an upwardly revised gain of 0.7% in September.
The Tuesday report suggests that home price increases are being revived after the pace of gains hit a seven-year low in July. The Federal Reserve’s three cuts to short-term interest rates in 2019 have accelerated sales of new and existing homes. The sales pickup may now be pushing up prices more quickly.
The cities with the largest price gains were Phoenix, where prices rose 5.8%, followed by Tampa, at 4.9%, and Charlotte at 4.8%. The pick-up in prices was broad-based: Twelve of the 20 cities in the index reported faster annual home price gains in October than in September.
Craig Lazzara, managing director at S&P Dow Jones Indices, which compiles the index, warned that it is still too soon to say whether home price increases have fully reversed their slowdown or if the past two months are just a blip.
Mortgage rates have fallen from roughly 4.6% to 3.7% in the past year. That’s lifted sales of existing homes 2.4% from a year earlier and sales of new homes by more than 7%.
“Teamed with a resilient job market, low mortgage rates have helped boost home buyer demand,” said Matthew Speakman, an economist at real estate data provider Zillow. “An extreme shortage of for-sale listings, particularly at lower price points, remains a concern and may ultimately result in a sharper re-acceleration in home prices than expected.”
- Lower mortgage rates and a robust labor market have helped consumers remain upbeat, luring potential home buyers and helping to lift prices. Phoenix, Tampa and Charlotte led gains.
- Other data this week pointed to further stabilization in the housing market. Contract signings to purchase previously owned U.S. homes increased in November for the third time in four months, National Association of Realtors data showed Monday.
- Prices rose on an annual basis in 19 of the 20 cities in the composite measure. Phoenix led with a 5.8% increase, followed by a 4.9% gain in Tampa and 4.8% advance for Charlotte. San Francisco was the lone city to post a year-over-year decline.
- Economists surveyed by Bloomberg had estimated a 2.1% annual gain.
- The FHFA’s data, derived from conforming mortgages, also showed that prices were up 5% in October from a year earlier.
Material from Bloomberg and the Associated Press has been used in this report.
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