Home prices in 20 U.S. cities rose 5% in July from the same month a year earlier, propelled by improving demand and limited supply.
The increase in the S&P/Case-Shiller index of property values followed a 4.9% advance in June, the group said Tuesday in New York. The median estimate of economists surveyed by Bloomberg called for a 5.2% year-over-year gain. Nationally, prices rose 4.7% over the 12-month period.
Scant inventory of homes on the market is supporting increases in property values, which is making real estate less affordable, particularly for first-time buyers. Historically low mortgage rates, steady job gains, rental inflation and an easing of still-tight credit standards should help prospective buyers find the wherewithal to make a purchase.
"There is still a supply factor making house prices go up a little bit faster," Gennadiy Goldberg, U.S. rates strategist at TD Securities in New York, said before the report. "You're still just seeing very gradual improvement."
The median estimate of 30 economists surveyed by Bloomberg called for a 5.2% year-over-year gain. Estimates ranged from increases of 4.5% to 6%. The S&P/Case-Shiller index is based on a three-month average, which means the July figure was influenced by transactions in June and May.
Home prices in the 20-city index
All 20 cities in the index showed a year-over-year advance, led by a 10.4% increase in San Francisco and a 10.3% advance in Denver. The smallest gain was in Washington, where property values climbed 1.7%.
The year-over-year price increases accelerated in 14 cities in July, compared with the 12 months ended in June. Boston showed the biggest pickup, while Phoenix posted its eighth consecutive annual gain, the longest streak of any of the 20 cities.
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.
Measured against a month earlier, property prices fell in 10 of the 20 cities in July and were unchanged in one, according to the seasonally adjusted data. Home values in San Diego, which were up 0.8%, showed the largest monthly increase, while Chicago registered the biggest decline — down 1.2%.
