US home price increases accelerate

This Wednesday, Sept. 6, 2017, photo shows a new home for sale in a housing development in Raeford, N.C. (AP Photo/Swayne B. Hall)

Home prices continued to climb in the U.S.

The S&P CoreLogic Case-Shiller National Home Price Index rose 6.2% in September, up from 5.9% a month earlier — the fastest annual rate increase since June 2014. The index was up 0.4% in September from a month earlier, beating analysts’ estimate of 0.3%.

Prices were lifted by low inventory of homes, at a 3.8-month supply, as well as a growing unemployment rate of 4.1% and the average rate on a 30-year mortgage of under 4%.

“Most economic indicators suggest that home prices can see further gains,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices in a press statement.

Home prices increased in all the cities tracked in the 20-city index, which posted a 6.2% year-over-year gain, up from 5.8% the previous month.

Concerns over affordability

“The price data have been showing solid gains pretty consistently in recent years while the housing activity data have been more mixed; over the past month or so, we have seen fairly widespread strength across much of the housing data,” wrote Daniel Silver of JPMorgan in a research note.

On Monday, the Commerce Department reported new single-family home sales in the U.S. rose 6.2% to a seasonally adjusted annual rate of 685,000 units in October  — the highest level since October 2007. It is the third straight month of sale increases.

Meanwhile, Lawrence Yun, chief economist at the National Association of Realtors, estimates that existing-home sales will finish 2017 at a pace of 5.47 million — the best since 2006 (6.47 million), but only a modest 0.4% uptick from 2016.

“Despite considerable demand all year, pending sales have lost a step in recent months because low supply is pushing prices higher and making home buying less affordable in several parts of the country,” said Yun in a recent press statement.

Blitzer shared similar concerns about escalating home prices. “One dark cloud for housing is affordability — rising prices mean that some people will be squeezed out of the market,” he said.

Amanda Fung is an editor at Yahoo Finance.

By using Yahoo you agree that Yahoo and partners may use Cookies for personalisation and other purposes