U.S. home prices accelerated in November compared with a year ago, pushed higher by rising sales and a tighter supply of available homes.
The Standard & Poor’s/Case-Shiller 20-city home price index rose 5.5 percent in November compared with the same month a year ago. That’s the largest year-over-year gain in six years.
All but one of the cities in the index posted annual gains. The largest gain was in Phoenix, where prices jumped nearly 23 percent. It was followed by San Francisco, where prices rose 12.7 percent, and Detroit, where they increased 11.9 percent.
Purchases of previously occupied homes rose last year to their highest level in five years. The National Association of Realtors forecasts that sales will rise 9 percent this year. Independent economists have similar forecasts.
Millions of homeowners still owe more on their mortgages than their homes are worth, making it difficult for them to sell. That’s one reason the supply of homes is so tight. But higher home values are lowering the number of those “under water” and should encourage more homeowners to put their homes on the market.
More people are also moving out on their own after living with friends and relatives in the recession. That’s driving a big gain in apartment construction and also pushing up rents. Higher rents are encouraging investors to buy homes and rent them.
The tighter supply of homes pushed builders in December to start work on the most homes in 4 ½ years. Last year was the best year for residential construction 2008, just after the recession started.
Home builders are also benefiting from the rebound. D.R. Horton Inc. said Tuesday that its profit in the three months ended in December more than doubled and orders jumped 39 percent.
“D.R. Horton is the best positioned it has been in its 35-year history,” chief executive Donald Horton said. “We are looking forward to the spring selling season with optimism.”
Thanks to the Washington Post for this posting.