Home prices in­crease in most ma­jor US cities

The Progress-Index - At Home - - News - CHRISTO­PHER S. RUGABER

WASHINGTON — Home prices in­creased in Septem­ber in most ma­jor U.S. cities, more ev­i­dence of a hous­ing re­cov­ery that is pro­vid­ing a lift to the frag­ile econ­omy.

Stan­dard & Poor’s/Case-Shiller re­ported Tues­day that its 20-city in­dex of home prices rose 3 per­cent in Septem­ber com­pared with the same month last year. Prices also gained 3.6 per­cent in the July-Septem­ber quar­ter com­pared with the same quar­ter in 2011.

Across the na­tion, prices in­creased in 18 of 20 cities over the 12-month pe­riod. In Phoenix, prices jumped 20.4 per­cent over that stretch to lead all cities. Prices in At­lanta showed a mod­est 0.1 per­cent in­crease, end­ing 26 straight con­sec­u­tive year-over-year de­clines.

Prices also rose in Septem­ber from Au­gust in 13 cities. Five metro re­gions posted de­clines, while two were un­changed.

In Las Ve­gas, one of the hard­est hit dur­ing the hous­ing cri­sis, prices in­creased 1.4 per­cent — the big­gest month-over-month gain. Prices rose 1.1 per­cent in Phoenix and Min­neapo­lis. The largest de­cline was in Cleve­land, where prices fell 0.9 per­cent.

Monthly prices are not sea­son­ally ad­justed, so some of the de­clines may sig­nal the end of the sum­mer buy­ing pe­riod.

David M. Bl­itzer, chair­man of the CaseShiller in­dex, said that when ad­just­ing for sea­sonal fac­tors, only one city showed a de­cline in Septem­ber ver­sus two in Au­gust. “De­spite the sea­sons, hous­ing con­tin­ues to im­prove,” Bl­itzer said.

The S&P/Case-Shiller in­dex cov­ers roughly half of U.S. homes. It mea­sures prices com­pared with those in Jan­uary 2000 and cre­ates a three-month mov­ing av­er­age. The Septem­ber fig­ures are the lat­est avail­able.

Steady in­creases in home prices have helped drive a mod­est re­cov­ery in the hous­ing mar­ket. Ris­ing prices en­cour­age more po­ten­tial buy­ers to come off the side­lines and pur­chase homes. And more peo­ple may put their homes on the mar­ket as they gain con­fi­dence that they can sell at a good price.

Higher home prices can also make home- own­ers feel wealth­ier and more likely to spend more. Con­sumer spend­ing ac­counts for about 70 per­cent of the U.S. econ­omy.

A big rea­son for the re­bound is that the ex­cess sup­ply of homes that built up be­fore the hous­ing cri­sis has fi­nally thinned out. The num­ber of pre­vi­ously oc­cu­pied homes avail­able for sale has fallen to a 10-year low. The in­ven­tory of new homes is also near the low­est level since 1963.

At the same time, more peo­ple are look­ing to buy or rent a home af­ter liv­ing with rel­a­tives or friends dur­ing and im­me­di­ately af­ter the Great Re­ces­sion.

Those trends are also push­ing up home sales and con­struc­tion. Sales of pre­vi­ously oc­cu­pied homes are near five-year highs, ex­clud­ing tem­po­rary spikes in 2009 and 2010 when a home­buyer tax credit boosted pur­chases.

Builders, mean­while, are more op­ti­mistic that the re­cov­ery will en­dure. A mea­sure of their con­fi­dence rose to the high­est level in six and a half years this month. And builders broke ground on new homes and apart­ments at the fastest pace in more than four years last month.

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