Home prices ticked up at a faster pace in October, bolstered by consistent jobs growth and a gradually expanding economy.
The Standard & Poor’s/Case-Shiller 20-city price index increased 5.5 percent over the previous 12 months, up slightly from 5.4 percent in September, according to a new report released on Tuesday.
{mosads}“Generally good economic conditions continue to support gains in home prices,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.
The 20-city index is still 11.5 percent below the peak hit in July 2006.
Overall, across the nation, the annual price gain was 5.2 percent, up from a 4.9 percent increase in September.
San Francisco, Denver and Portland, Ore., reported the highest year-over-year gains among the 20 cities, with increases of 10.9 percent for all three.
Meanwhile, 12 cities reported greater price increases over the year ending in October.
Phoenix posted the longest streak of year-over-year gains, up 5.7 percent in October, its 11th straight increase in annual price gains.
The housing sector is still trying to ramp up inventories as the lack of houses available for sale is holding back faster growth for the sector especially with demand increasing amid low mortgage rates.
“Inventories of existing homes have averaged around a five-month supply for the past year, a level that suggests a fairly tight market with limited supplies,” Blitzer said.
“Sales of new single-family homes, despite recent increases in construction, remain mixed to soft compared to the trend in existing home sales,” he said.
Borrowing costs could rise next year following the Federal Reserve’s increase of a key interest rate earlier this month.
But the chances of any rapid jump in loan rates is unlikely.
Blitzer said that the “data suggest that potential homebuyers need not fear runaway mortgage interest rates.”
From May 2004 to July 2007, the Fed funds rate moved up to 5.25 percent from 1 percent but mortgage rates rose to only 6.75 percent from 6 percent.