(Bloomberg)—A measure of home prices in 20 U.S. cities rose in October by the most since 2014 as ultra-low mortgage rates and increased buyer appetite for more space depleted housing inventory.
The S&P CoreLogic Case-Shiller index of property values climbed 7.95% from the same month the previous year, data released Tuesday showed. The median forecast in a Bloomberg survey of economists called for a 6.95% year-over-year advance. Home prices rose 1.6% from the previous month, also more than projected and the most since April 2013.
The figures show how a lean number of listings and solid demand, fueled by cheap borrowing costs, have given sellers more leeway to raise asking prices. At the same time, the lack of inventory and surge in home prices threaten to slow housing’s momentum and price some buyers out of the market.
Reports last week showed sales of new houses dropped in November to the slowest pace in five months, while purchases of existing homes declined as record-low supply constrained demand.
A gauge of home prices nationwide increased 8.4% from a year earlier, the most since March 2014.
“Although the full history of the pandemic’s impact on housing prices is yet to be written, the data from the last several months are consistent with the view that Covid has encouraged potential buyers to move from urban apartments to suburban homes,” Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices, said in a statement.
The S&P CoreLogic Case-Shiller data showed all cities posted year-over-year home-price gains, led by Phoenix, Seattle and San Diego. Data for Detroit were excluded because of pandemic-related reporting delays.
A separate report from the Federal Housing Finance Agency -- which derives its data from mortgages that conform to Fannie Mae and Freddie Mac limits -- reported that its purchase-only price index rose 10.2% in October from a year ago, the most since 2005.
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