Home values in 20 U.S. cities rose at a faster pace in the year ended October 2015, as lean inventories of available properties combined with steadily improving demand.
The S&P/Case-Shiller index of property values climbed 5.5 percent from October 2014 after rising 5.4 percent in the year ended September, the group said Tuesday in New York. Nationally, prices rose 5.2 percent year-over-year.
A limited supply of properties for sale has helped prop up home values, boosting the household wealth levels of U.S. homeowners in the process. Faster wage growth and continued low borrowing costs will be needed to keep low-income and first-time buyers in the market and provide the next leg of growth in the housing recovery.
Job gains and more household formation “will continue to boost demand, and prices should continue to stay within this current healthy range in 2016,” Anika Khan, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. And even after the Federal Reserve’s first interest-rate increase in almost a decade, “it’s still going to be an environment where overall mortgage rates will remain low.”