US house prices rise most in seven years
The Standard & Poor's/Case-Shiller home price index, which tracks monthly changes in the value of residential property in 20 metropolitan regions across the US, showed that prices adjusted for seasonal variations rose 1.1 per cent, compared with a 1.3 per cent gain in February.
US house prices rose in March and racked up their largest annual gain in seven years as more Americans rushed to buy homes in a market with low inventory levels.
The Standard & Poor's/Case-Shiller home price index, which tracks monthly changes in the value of residential property in 20 metropolitan regions across the US, showed that prices adjusted for seasonal variations rose 1.1 per cent, compared with a 1.3 per cent gain in February. This beat consensus forecasts of a 1 per cent uptick. The year-on-year gauge, which is a better indicator of trends, showed prices surged 10.9 per cent from March 2012, the largest increase since April 2006. This beat February's 9.4 per cent advance and economists' expectations for a 10.2 per cent rise. Also read: Economic gains boost US confidence to 5-year high"The combination of rising existing home sales and very tight inventory has boosted prices, and further gains should be expected over the next few months," said Ian Shepherdson, chief economist at Pantheon Macroeconomic AdvisorsRecord-low mortgage interest rates and an improving jobs market have encouraged buyers. Also reducing supplies and fuelling prices have been purchases of cheap properties by cash-rich Americans and large institutional investors looking to cash in on the housing recovery.Purchases of previously owned homes rose to a three-and-a-half-year high in April, to a 4.97m pace, according to National Association of Realtors data released last week. Economists say higher prices should support future housing activity by boosting homebuyer confidence as households feel wealthier as well as bringing many underwater homeowners - those who owe more on their homes than what they are worth - back above water. Michael Gapen, senior US economist at Barclays, said he expects "rising real estate wealth to support household balance sheets and underpin consumption, helping the broader economy to offset a substantial fiscal drag in 2013".The Case-Shiller index is based on a three-month average, meaning the March figure was influenced by transactions in February and January. David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said: "Home prices in all 20 cities posted annual gains for the third month in a row. Twelve of the 20 saw prices rise at double-digit annual growth." Phoenix and San Francisco led the yearly gains, up 22.5 per cent and 22.2 per cent respectively. More News From Financial Times
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