WASHINGTON – Home prices in 20 cities rose in November from a year ago by the most in almost eight years, providing a boost to household wealth.
The S&P/Case-Shiller index of property prices in 20 cities climbed 13.7 percent from November 2012, the biggest 12-month gain since February 2006, after a 13.6 percent increase in the year ended in October, a report from the group showed Tuesday. The median projection of 31 economists surveyed by Bloomberg called for a 13.8 percent advance.
In the Twin Cities area, home prices were flat from October to November, but were up by 10.5 percent compared with the previous year.
A limited number of available properties are helping to sustain home price appreciation even as higher mortgage rates cool demand and leave purchases out of reach for some Americans. Further strides in the housing market this year would be made easier by a pickup in job and income growth.
"One of the reasons consumer spending has looked better is because household balance sheets are appearing to be healthier, and an important part of that is that home values are going up," said Michael Feroli, chief U.S. economist at JPMorgan Chase in New York. "If home prices continue to increase, that indicates that there is still a shortfall of supply, and that should lead to more construction."
The S&P/Case-Shiller index is based on a three-month average, which means the November figure was also influenced by transactions in October and September.
Home prices adjusted for seasonal variations rose 0.9 percent in November from October after a 1.1 percent gain the prior month.
The month-over-month price gains were led by Atlanta and Miami, which showed 1.6 percent increases, followed by 1.3 percent gains in Detroit, Boston and San Francisco. Property values rose in all 20 metropolitan areas, with the smallest advances coming in Phoenix and Seattle.
"Home prices continue to rise despite last May's jump in mortgage interest rates," David Blitzer, chairman of the S&P index committee, said in a statement. "Combined with low inflation — 1.5 percent in 2013 — homeowners are enjoying real appreciation and rising equity values."
Unadjusted prices fell 0.1 percent in November from the previous month after a 0.2 percent gain in October. The year-over-year gauge, which uses records dating back to 2001, provides a better indication of price trends, according to Karl Case and Robert Shiller, creators of the index.
Staff writer Jim Buchta contributed to this report.