By Shobhana Chandra
WASHINGTON - Home prices in 20 U.S. cities rose in November from a year earlier by the most in more than six years, indicating the U.S. housing rebound is gaining ground.
The S&P/Case-Shiller index of property values increased 5.5 percent from November 2011, the biggest year-over-year gain since August 2006, a report showed today in New York. The median projection of 30 economists surveyed by Bloomberg called for a 5.6 percent advance.
Mortgage rates near a record low are propelling demand for real estate that’s outpacing the available supply, a sign prices will keep strengthening. Home-equity gains and an improving job market may help to put a floor under Americans’ confidence and spending, the biggest part of the economy, cushioning the hit from a higher payroll tax that began in January.
“The rise in home prices is a demand-supply story that should continue this year,” Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said before the report. “Inventories are low, so that’s good news for home prices. Higher prices will also boost confidence and spending overall.”
Stock-index futures held earlier losses after the report. The contract on the Standard & Poor’s 500 Index maturing in March dropped 0.3 percent to 1,493.2 at 9:01 a.m. in New York.
Bloomberg survey estimates ranged from 3.4 percent to 6.4 percent. The S&P/Case-Shiller index is based on a three-month average, which means the November data were influenced by transactions in October and September.
The October reading was revised to show a 4.2 percent year- to-year advance from a previously reported 4.3 percent gain.
Home prices adjusted for seasonal variations climbed 0.6 percent in November from the prior month, matching October’s increase. That compares with the Bloomberg survey median of a 0.7 percent rise.
The month-over-month gain was led by San Francisco, followed by Minneapolis.
Unadjusted prices in the 20 cities fell 0.1 percent in November from the previous month. Property values typically fall during this time of year.
The year-over-year gauge provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index. Year-over-year records began in 2001.
Nineteen of the 20 cities in the index showed a year-over- year gain, led by a 22.8 percent jump in Phoenix and a 12.7 percent increase in San Francisco.