Property values are expected to keep climbing thanks to cheaper borrowing costs and renewed consumer confidence at a time when the number of homes on the market is at its lowest for almost a decade.
The latest S&P/Case-Shiller index of property values increased 10.9% on an annual basis, the biggest 12 month gain since April 2006. This comes on top of a 9.4% annual increase in February.
Meanwhile, respondents to the monthly Bloomberg real estate survey are upbeat. ‘We have a continued, gradual recovery. The data is solid,’ said Brian Jones, a senior economist for Societe Generale in New York, who projected a 10.6% increase, the highest forecast in the Bloomberg survey. Bloomberg survey estimates ranged from increases of 9.3% to 10.6%.
The S&P/Case-Shiller index also show that on a quarterly basis prices covering all of the US climbed 10.2% in the first quarter from the same period in 2012, compared with a 7.3% gain in the December 2012 quarter.
Los Angeles, Seattle, Charlotte, North Carolina, Portland, Oregon, and Tampa, Florida, showed their biggest month to month gains in more than seven years.
The year on year measure, which includes records going back to 2001, provides a better indication of price trends, the group has said. All 20 cities in the index showed an increase in year on year prices, led by gains of 22.5% in Phoenix and 22.2% in San Francisco. The smallest gain was in New York, up 2.6%.
The Case-Shiller index follows other reports this month that show continued strength in residential real estate. Sales of new homes increased 2.3% in April compared to March, the second highest level in almost five years, according to Commerce Department data. And the median selling price jumped 14.9% from a year earlier to a record $271,600.
Existing home sales climbed, to a 4.97 million pace, the highest level in more than three years, according to the National Association of Realtors. The median price rose 11%, the fifth consecutive month that property values advanced more than 10% year on year.
‘Other housing market data reported in recent weeks confirm these strong trends,’ said David Blitzer, chairman of the S&P index committee. But he added that at the same time, the larger than usual share of multifamily housing, a large number of homes still in some stage of foreclosure and buying to rent by investors suggest that the housing recovery is not complete.
Lower mortgage rates are helping the market. The average rate on a 30 year fixed mortgage was 3.59% in the week ended May 23, down from 3.78% a year earlier, according to data from Freddie Mac. The rate reached a record low of 3.31% last November.
