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Home Prices Jump 10.9%, Largest Annual Gain in 7 Years
Nick Timiraos / The Wall Street Journal / May 28, 2013
Home prices in March rose by 10.9% from a year earlier, the largest such gain in seven years, according to an index tracking home prices in 20 U.S. cities.
The Standard & Poor’s Case-Shiller index, released Tuesday, showed that all 20 cities had posted year-over-year growth for the third straight month, the latest sign of how tight inventories and growing housing demand have led to a surge in home prices after several years of declines.
There are already signs that home-price appreciation is set to continue its blistering pace this summer because the inventory of homes for sale has remained low and buyer urgency has picked up, fueled by improving consumer confidence and mortgage rates that have been hovering near record lows.
Prices increased in March by 1.4% from February and by 0.3% in February from January, a period in which sales volumes—and, consequently, home-price growth—are typically muted because of winter weather. Home prices haven’t increased during the first quarter of the year since 2006, and the quarterly gain of 1.8% this year was the largest for the January-to-March period since 2005.
Rising home prices should help buoy consumer confidence and the broader economy because houses represent the largest financial asset for many Americans. Rising prices could play an important role boosting home sales if they encourage more sellers to test the market. Many sellers have held back from selling at prices that are still down sharply from their peak, and would-be buyers have grumbled over the past year about shortages of desirable pickings.