US home prices jump in Septem­ber

Kuwait Times - - BUSINESS -

WASH­ING­TON: US home prices rose in Septem­ber from a year ear­lier at the fastest pace in 13 months as a lack of houses for sale has forced buy­ers to bid up avail­able prop­er­ties. The Stan­dard & Poor’s/Case-Shiller 20-city home price in­dex, re­leased yes­ter­day, in­creased 5.5 per­cent in Septem­ber com­pared with a year ago, the largest an­nual gain since Au­gust 2014.

Steady job gains and low mort­gage rates have pro­pelled a solid re­bound in home sales, which are on track to reach the high­est level since 2007. The un­em­ploy­ment rate fell to 5 per­cent in Oc­to­ber as em­ploy­ers added the most jobs since De­cem­ber. Bor­row­ing costs have ticked up but re­main be­low 4 per­cent, a low level his­tor­i­cally.

San Francisco re­ported the largest an­nual home price in­crease, at 11.2 per­cent, fol­lowed by Den­ver at 10.9 per­cent. Port­land had the third largest gain, at 10.1 per­cent. Sales of ex­ist­ing homes, while im­prov­ing, have been volatile this year. They slipped in Oc­to­ber af­ter a healthy jump the pre­vi­ous month, ac­cord­ing to the Na­tional As­so­ci­a­tion of Real­tors.

Over­all, home sales have in­creased 3.9 per­cent in the past 12 months. At the same time, the num­ber of avail­able homes has fallen 4.5 per­cent. That squeeze has pushed up prices. The typ­i­cal home sold for $219,600 last month, up nearly 6 per­cent from a year ago, the Real­tors group said Mon­day. That is the high­est me­dian price for the month of Oc­to­ber since Oc­to­ber 2005, at the height of the hous­ing bub­ble.

Home prices are ris­ing at more than dou­ble the pace of in­fla­tion and much faster than wages, pric­ing many Amer­i­cans out of the hous­ing mar­ket. That has also pushed up rents as Amer­i­cans in­creas­ingly stay in apart­ments. Still, home prices are ris­ing at a much slower pace than the dou­ble-digit gains seen in most of 2013. David Bl­itzer, chair­man of the S&P Dow Jones In­dex Com­mit­tee, said that the higher prices aren’t out of line with ris­ing rents. That’s a change from the hous­ing bub­ble, when home prices soared much higher than rental costs.

Sev­eral fac­tors are likely hold­ing back the sup­ply of avail­able homes. Many Amer­i­cans still don’t have much hous­ing eq­uity and as a re­sult would profit lit­tle from a sale. That may be de­lay­ing them from listing their homes.

In ad­di­tion, the av­er­age rate for a 30-year mort­gage has picked up in the past three years. It is cur­rently al­most 4 per­cent, which is still low. But mil­lions of Amer­i­cans have re­fi­nanced their mort­gages at much lower rates and may be re­luc­tant to trade up to a new home be­cause do­ing so would re­quire tak­ing on a higher mort­gage rate.

De­vel­op­ers are also build­ing homes at a his­tor­i­cally mod­est pace. Con­struc­tion of sin­gle-fam­ily homes dropped 2.4 per­cent in Oc­to­ber com­pared to the pre­vi­ous month, the Commerce Depart­ment said last week. The Case-Shiller in­dex cov­ers roughly half of US homes. The in­dex mea­sures prices com­pared with those in Jan­uary 2000 and creates a three-month mov­ing av­er­age. The Septem­ber fig­ures are the lat­est avail­able. — AP

KUALA LUMPUR: Prom­i­nent businessman Yusuff Ali MA with Prime Min­is­ter Naren­dra Modi and Malaysian Prime Min­is­ter Na­jib Ab­dul Razak dur­ing the of­fi­cial luncheon hosted by the Malaysian PM in honor of In­dian PM in Kuala Lumpur yes­ter­day.

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