Home prices rose in May by the most in more than seven years as the recovery in U.S. residential real estate gained momentum.
The S&P/Case-Shiller index of property values climbed 12.2 percent from May 2012, the biggest 12-month gain since March 2006, after advancing 12.1 percent a month earlier, a report showed today in New York. The median projection of 31 economists surveyed by Bloomberg called for a 12.4 percent advance.
Historically low borrowing costs, short supply and improving job market are boosting demand for residential property and driving prices up. The climb in home values is also bolstering household finances, which may spur consumer spending, the largest part of the U.S. economy.
“We continue to look forward to upward momentum” in the housing market, said Anika Khan, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a subsidiary of the largest U.S. mortgage lender. “We still have historically low inventory levels.”
Home prices adjusted for seasonal variations rose 1 percent in May from the prior month, compared with a 1.7 gain in April. The Bloomberg survey median called for a 1.4 percent advance.
The year-over-year gauge, which includes records going back to 2001, provides a better indication of price trends, the group has said.
All 20 cities in the index showed an increase in year-over-year prices, led by gains of 24.5 percent in San Francisco and 23.3 percent in Las Vegas. New York showed the smallest gain at 3.3 percent.