US home prices rise 13.6% in one year

US home prices rose 13.6% in October 2013 in twenty cities compared to October 2012.

This represents the highest increase in over 7 years, according to the S&P/Case-Home Price Indices.

The supply of homes for sale has declined, especially foreclosed properties, resulting in higher prices, despite higher mortgage rates.

As employment figures continue improving economists expect house prices to continue rising steadily in 2014.

US home prices rose for 17 successive months

The 10-City and 20-City Composites have reported seventeen consecutive months of annualized price rises.

The two Composites saw a moderate monthly gain for October 2013 of 0.2%. Eighteen cities had lower property price increases in October compared to September. San Francisco had its first fall in October in 19 months, while Phoenix boasted 25 successive months of increases.

David M Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices said:

“Home prices increased again in October. Both Composites’ annual returns have been in double-digit territory since March 2013 and incrasing; now up 13.6% in the year ending in October. However, monthly number show we are living on borrowed time and the boom is fading.”

Blitzer added that year-over-year figures rose moderately from the previous month. Thirteen cities posted double-digit annual returns on both Composites.

San Diego, San Francisco and Las Vegas, the top cities as far as property price growth is concerned, saw smaller increases in October compared to September. New York, Washington and Cleveland, however – cities that had been under-performing, had better October increases than during the previous months.

Blitzer added:

“The key economic question facing housing is the Fed’s future course to scale back the quantitative easing and how this will affect mortgage rates. Other housing data paint a mixed picture, suggesting that we may be close to the peak gains in prices. However, other economic data points to somewhat faster growth in the NewYear. Most forecasts for home prices point to single digit growth in 2014.”