U.S. home prices climbed 5% from Feb 2014: S&P/Case-Shiller

Home prices in 20 U.S. cities climbed at a faster pace than forecast in the year ended February, a sign the housing industry may be gaining momentum amid low borrowing costs and continued job growth.

The S&P/Case-Shiller index of property values increased 5 percent from February 2014, the biggest year-to-year gain since August, after rising 4.5 percent in the year ended in January, the group said today in New York. The median projection of 28 economists surveyed by Bloomberg called for a 4.7 percent year-over-year advance. Nationally, prices rose 4.2 percent.

Higher real estate prices may persuade more homeowners to put their properties on the market, boosting the limited inventory that’s been holding some prospective buyers back. More supply, in addition to continued gains in the labor market and looser lending standards, will be needed to help the housing market accelerate after showing inconsistent progress.

“There’s a combination of factors that are pushing prices higher — one is that there’s some demand for housing, and also there hasn’t been much of a rise in inventory,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York and the best forecaster of home-price changes over the past two years, according to data compiled by Bloomberg. “Prices are rising moderately, and we’ll probably continue to see that for the rest of the year.”

Survey Results

Economists’ estimates in the Bloomberg survey ranged from gains of 4.4 percent to 5.3 percent. The S&P/Case-Shiller index is based on a three-month average, which means the February figure was also influenced by transactions in January and December.

Home prices in the 20-city index adjusted for seasonal variations increased 0.9 percent in February for a third consecutive month. The Bloomberg survey median called for a 0.7 percent gain.

All 20 cities in the index showed a year-over-year increase, led by gains of 10 percent in Denver and 9.8 percent in San Francisco. Washington showed the smallest increase of 1.4 percent.