U.S. home prices jumped 1.8 percent in March, the biggest monthly increase in at least two decades, as the housing recovery builds momentum, the Federal Housing Finance Agency said today.
The rise from February exceeded all analysts’ estimates, which ranged from a decline of 0.2 percent to a gain of 0.7 percent. Compared with a year earlier, prices surged 2.7 percent, the FHFA said in a statement.
Record-low mortgage rates, job gains and a dwindling inventory of properties available for sale have combined to strengthen demand for homes. Purchases of previously owned U.S. houses climbed 3.4 percent in April to a 4.62 million annual rate, the first increase in three months, the National Association of Realtors said yesterday.
“Increased affordability and a somewhat smaller inventory of homes for sale are positively impacting house prices,” Andrew Leventis, principal economist with the FHFA in Washington, said in the statement.
The FHFA report measures changes in real estate values using purchases of properties with mortgages backed by Fannie Mae (FNMA) or Freddie Mac. (FMCC) It doesn’t provide a specific price for homes. The monthly increase was the largest in records going back to 1991, according to data compiled by Bloomberg. The average estimate of 18 economists surveyed by Bloomberg was for a 0.3 percent monthly gain.
“Prices are hitting a bottom,” Patrick Newport, an economist for IHS Global Insight in Lexington, Massachusetts, said yesterday in a telephone interview. “It’s good news because it means that consumer wealth that comes from a home is no longer dropping.”