Home prices in 20 U.S. cities rose in September by the most in more than three years, indicating resilient demand at a time of persistently scarce inventory, according to S&P CoreLogic Case-Shiller data released Tuesday.
The 20-city property values index increased 6.2% year-to-year (the estimate was6%), the most since July 2014, after gaining 5.8% year-to-year. The national home-price gauge rose 6.2% year-to-year. The seasonally adjusted 20-city index advanced 0.5% month-to-month (the estimate 0.3%).
The residential real estate market is benefiting from steady demand backed by a strong job market and low mortgage rates. The ongoing scarcity of available houses on the market, especially previously owned dwellings, is likely to keep driving up prices. Eight cities have surpassed their peaks from before the financial crisis, according to the report.
In the past few years, growth in property values has been consistently outpacing wage gains, crimping affordability for younger, first-time buyers. That could eventually become a headwind to faster price appreciation. For now, though, rising property values are also helping to boost home equity and support consumer spending, the biggest part of the economy.
"Most economic indicators suggest that home prices can see further gains," David Blitzer, chairman of the S&P index committee, said in a statement. "One dark cloud for housing is affordability — rising prices mean that some people will be squeezed out of the market."
All 20 cities in the index showed year-over-year gains, led by a 12.9% increase in Seattle and a 9% advance in Las Vegas. The slowest gains were in the Washington area at 3.1% and Chicago at 3.9%. After seasonal adjustment, all 20 cities showed month-over-month gains; Atlanta had the biggest rise at 1.3%, followed by San Francisco with a 1.1% increase.
A separate report from the Federal Housing Finance Agency showed its home-price index climbed 0.3% in September from a month earlier after a revised 0.8% gain. The FHFA price index rose 6.3% in September from a year earlier.