Home Prices Beat Estimates With 0.8% Gain in November

Home prices rose more than economists estimated in November, a sign job growth is helping to boost housing demand.

Prices climbed 0.8% on a seasonally adjusted basis from October, the Federal Housing Finance Agency said in a report from Washington. The average economist estimate was for a 0.3% increase, according to data compiled by Bloomberg. Prices increased 5.3% from November 2013.

The property market is benefiting from the lowest unemployment rate since June 2008. Payrolls climbed by 252,000 workers in December, following a 353,000 gain the prior month, and the jobless rate dropped to 5.6%, Labor Department figures show. An additional 2.95 million Americans found work in 2014, the most in 15 years.

"The labor market activity will ignite increasing demand and loosen tight credit constraints," Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York, said yesterday in a telephone interview. "The labor market will always be the answer to housing woes."

Economic growth will probably accelerate this year, improving prospects for wage increases and boosting household formation, Fannie Mae's Economic & Strategic Research Group said in a separate report Thursday. The group raised its projection for economic growth this year to 3.1% from 2.7% in its prior forecast.

The pace of home-price gains has slowed in the past year. In November 2013, values were up 7.5% from a year earlier, FHFA data show.

"The fact that you see house-price moderation is good news for the housing market," Thomas Costerg, an economist at Standard Chartered Bank in New York, said in a telephone interview on Wednesday. "Affordability is improving."

Prices in November climbed 7.5% from a year earlier in the Pacific region, including California, Washington and Oregon; and 6.6% in the West South Central area — Texas, Oklahoma, Louisiana and Arkansas.

New England, including Connecticut, Maine and Massachusetts, had the smallest gain from a year earlier, at 1.6%, and was the only region to have a monthly decline. Prices fell 0.9% from October.

The FHFA index measures transactions for single-family properties financed with mortgages owned or securitized by Fannie Mae and Freddie Mac. The U.S. measure is 4.5% below its April 2007 peak and about the same as the October 2005 level.

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