Rise in home prices in 20 U.S. cities reflects lean inventory
A larger-than-forecast increase in home prices in 20 U.S. cities in March underscores both steady demand and lean inventory, figures from S&P CoreLogic Case-Shiller showed Tuesday.
The 20-city property values index rose 5.9% from March 2016 (the forecast was 5.7%), matching February as the biggest since July 2014. The national price gauge climbed 5.8% in the 12 months through March. The seasonally adjusted 20-city index rose 0.9% from a month earlier (matching the forecast).
Mortgage rates at a six-month low, along with a strong job market and healthier finances, are giving prospective buyers more wherewithal to make purchases. In addition to rising demand, persistent inventory shortages in the previously owned property market are also contributing to price gains. At the same time, wage growth has been slower to pick up than property values, representing a potential headwind to even faster price gains.
"While there is some regional variation, prices are rising across the U.S.," David Blitzer, chairman of the S&P index committee, said in a statement. The gain reflected "unusually low inventory of homes for sale." He said "there is no way to tell when rising prices and mortgage rates will force a slowdown in housing."
All 20 cities in the index showed year-over-year gains, led by a 12.3% increase in Seattle and a 9.2% advance in Portland, Ore. After seasonal adjustment, Minneapolis had the biggest month-over-month rise at 1.3%, followed by Detroit with a 1.2% increase. Home prices fell in Cleveland and Tampa, Fla., from the prior month.