In the year ended October, home values were witnessed to have increased at a faster pace in 20 US cities. Lean inventories of available properties along with improving demand are said to have increased home values.
The S&P/Case-Shiller index of property values jumped 5.5% from October 2014 after it increased 5.4% in the year ended September. As per a survey carried out by Bloomberg, 21 analysts have predicted a 5.6% advance. But nationally, prices increased 5.2% year-on-year.
Anika Khan, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said that job strengthening and more household formation will further boost demand and prices will stay within the current healthy range in 2016.
Experts affirmed that a limited supply of properties for sale in addition to boost in the household wealth level of US homeowners have added to improve home values. It is said that faster wage growth and continued low borrowing costs are two major things required keeping low-income.
Sophia Kearney-Lederman, an economic analyst at FTN Financial at New York, was of the view, “We’re not at a scary point in any way -- prices are creeping up, but tight supply is definitely keeping them a little more elevated than one would hope. There are certain hot-spot areas, particularly on the coasts and out west”.
All the 20 cities in the index have shown a year-over-year increase. Chicago has shown the smallest rise at 1.3%. David Blitzer, chairman of the S&P index committee, said that positive economic conditions help support gains in home prices.
Consumers’ expectations of low inflation and continuous economic growth and recent rise in residential construction are among other positive factors. New construction is considered to be a good thing for the industry. Labor-market improvement will give the needed boost consumers to buy a home.