Home prices see biggest annual gain in seven years in April: S&P

NEW YORK Tue Jun 25, 2013 9:22am EDT

A single family home is shown for sale in Encinitas, California May 22, 2013. REUTERS/Mike Blake

A single family home is shown for sale in Encinitas, California May 22, 2013.

Credit: Reuters/Mike Blake

NEW YORK (Reuters) - Single-family home prices jumped in April, racking up their biggest annual gain in seven years in a sign of growing momentum in the housing recovery, a closely watched survey showed on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 1.7 percent on a seasonally adjusted basis, topping forecasts for 1.2 percent.

Prices in the 20 cities accelerated by 12.1 percent year over year, which was also above expectations and the biggest annual gain since March 2006.

"The recovery is definitely broad based," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.

On a non-seasonally adjusted basis, prices in the 20 cities rose 2.5 percent, the biggest monthly gain in the index's history, the report said.

A tightening of inventory available for sale, fewer foreclosures and buying from investors has helped push prices higher over the past year as the battered housing sector has gotten back on its feet.

U.S. stock index futures held on to their gains immediately after the data, while the dollar extended its advance against the euro. Ten-year Treasury securities prices were little changed in choppy trade.

Prices in all 20 cities were higher compared to a year ago, with Atlanta, Dallas, Detroit and Minneapolis seeing their biggest ever increases.

San Francisco led the group with a 23.9 percent gain in prices over April last year, while hard-hit Las Vegas surged 22.3 percent.

Returning demand from traditional buyers has also improved the market's fortunes as homebuyers have been enticed by historically low mortgage rates.

A recent spike in rates has raised some concerns that could dampen demand. Still, most analysts don't see the rise in rates as putting an end to the housing recovery and rates remain low by historical levels.

"Home buyers have survived rising mortgage rates in the past, often by shifting from fixed rate to adjustable rate loans," said Blitzer.

"In the housing boom, bust and recovery, banks' credit quality standards were more important than the level of mortgage rates."

With some banks easing credit restrictions, "the recovery should continue," he said.

The increase in rates has come as the Federal Reserve has signaled it expects to start slowing its $85 billion a month bond-buying program later this year. The program includes purchases of mortgage-backed securities.

(Reporting by Leah Schnurr; Editing by Chizu Nomiyama)

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Comments (4)
Vuenbelvue wrote:
Who is responsible for the gain in sales and increase in value? These companies go to the sale with cash backed by Wall Street and don’t wait 3 months for a mortgage approval.

Major corporate buyers of single family homes changed to rentals:
Blackstone Group 29,000 properties
Tricon Capital Group 2,300 properties
Silver Bay Realty 4,600 properties
American Residential Properties 2,500 properties
Colony American Homes 9,600 properties
Waypoint Homes Realty 3,500 properties
American Homes 4 Rent 14,200 properties

Jun 25, 2013 9:13am EDT  --  Report as abuse
totherepublic wrote:
This is not good news.

Jun 25, 2013 9:39am EDT  --  Report as abuse
mountainrose wrote:
Same Shiller from Case-Shiller I saw on CNBC in March telling viewers he did not know why there was a housing inventory problem in the US. Maybe this report on Zillows will help. 44% of mtgs in US being zombified http://mhanson.com/archives/1269 thus unable to list their homes, number jumps to 60% if you add people who cant qualify for income or credit reasons

Jun 25, 2013 9:54am EDT  --  Report as abuse
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