U.S. home prices climbed at a solid pace in August as more buyers competed for fewer available properties.
The Standard & Poor’s CoreLogic Case-Shiller 20-city home price index rose 5.1% in August, after a 5% gain in July. Portland, Seattle and Denver reported the strongest year-over-year increases for the seventh month in a row, with gains of 11.7%, 11.4% and 8.8%, respectively.
Steady hiring, low mortgage rates and some early signs of rising pay have encouraged more Americans to buy homes. Sales of existing properties increased 3.2% in September from August, the National Assn. of Realtors said last week.
Yet the number of homes for sale has fallen nearly 7% from a year ago, the trade group said. Just 2.04 million homes were for sale in September.
“Demand is high and enthusiasm for homeownership remains strong, especially among all-important young, minority and would-be first-time buyers,” Svenja Gudell, chief economist at real estate data provider Zillow, said. “Still, the market can’t stay on this course forever, and continued inventory shortages are leading to intense competition, escalating prices and mounting buyer frustration, with the average home search over the past year taking more than four months.”
The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The August figures are the latest available.
Developers are building more new homes, but not quickly enough to restrain price increases. Builders broke ground on 783,000 single-family homes at a seasonally adjusted annual rate in September, up 5.4% from a year earlier. Apartment construction fell sharply.
Many institutional investors bought homes after prices fell sharply in the housing bust and are continuing to rent them out rather than sell them.
Home prices rose 8.1% in Dallas from a year earlier, 7.1% in Miami and 6.7% in San Francisco. All 20 cities recorded price increases from a year earlier.
Home prices plunged 35% from their peak in July 2006 until they bottomed out in March 2012. They have since risen to 7.2% below the peak.