Home prices climbed in October by the most in more than two years as the real-estate market rebounds and contributes to the U.S. economic recovery.
The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent from October 2011, the biggest 12-month advance since May 2010, the group said today in New York. The median forecast of 30 economists in a Bloomberg survey projected a 4 percent gain.
Property values will probably keep heading higher as record-low mortgage rates, a growing population and an improving economy spur demand for housing. The turnaround in real estate is buoying household confidence and wealth, one reason why consumer spending is growing even as concern mounts that lawmakers will fail to stave off looming tax increases.
“The housing recovery is moving along quite well,” Sam Coffin, an economist at UBS Securities LLC in Stamford, Connecticut, said before the report. “Home prices are expected to keep rising as demand improves. Household formation has picked up, and that soaks up inventory pretty quickly.”
Stock-index futures held earlier gains after the report as President Barack Obama and Congress prepared to resume budget discussions and amid expectations Japan’s new government will act to bolster the economy. The contract on the Standard & Poor’s 500 Index maturing in March rose 1.4 percent to 1,421.9 at 9:02 a.m. in New York.
Estimates in the Bloomberg survey ranged from unchanged to a 4.9 percent gain.
The price increase accelerated from a 3 percent advance in the 12 months ended September. The Case-Shiller index is based on a three-month average, which means the October data were influenced by transactions in August and September.
Home prices adjusted for seasonal variations rose 0.7 percent in October from the prior month, with 17 of 20 cities showing gains. Las Vegas showed the biggest gain with a 2.4 percent advance, followed by San Diego with a 1.7 percent increase.
Property values dropped the most in Chicago, which fell 0.7 percent over the month.
Unadjusted prices in the 20 cities dropped 0.1 percent in October from the prior month. Prices tend to decrease during this time of year, the group said.
The year-over-year gauge provides better indications of trends in prices, according to the S&P/Case-Shiller group. The panel includes Karl Case and Robert Shiller, the economists who created the index.
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