Jpmorgan sees home prices up 14%

JPMorgan Chase & Co. (JPM) more than doubled its forecast for U.S. home price gains in 2013 to 7 percent this week, and predicts a more than 14 percent increase through 2015. Bank of America Corp. (BAC) said last week property values will jump 8 percent this year, up from a prior estimate of 4.7 percent in a report titled “Someone say house party?”

The two biggest U.S. banks are predicting an accelerating rebound as homebuyers and investors rush to acquire a dwindling supply of properties and the Federal Reserve pushes down borrowing costs by buying mortgage bonds. That’s strengthening the economy and sustaining a rally in homebuilder shares after the stocks more than doubled since the end of 2011. The two biggest U.S. banks are predicting an accelerating rebound as homebuyers and investors rush to acquire a dwindling supply of properties and the Federal Reserve pushes down borrowing costs by buying mortgage bonds. That’s strengthening the economy and sustaining a rally in homebuilder shares after the stocks more than doubled since the end of 2011.

“We still think we are in the early innings of a prolonged recovery in housing and the economy,” said Samantha McLemore, a money manager for Bill Miller’s $1.2 billion Legg Mason Capital Management Opportunity Trust, which has a range of holdings tied to a housing rebound and has gained 20 percent this year besting 99 percent of rivals. Home prices rose 6.8 percent in December from the year earlier, the biggest gain since 2006, according to the S&P/Case- Shiller home-price index of 20 cities. The measure is still 29 percent below the peak that year after soaring homeowner defaults helped trigger.