Home prices rose in the year ended in September by the most since July 2010, showing the recovery in the U.S. real estate market is a source of strength for the economy.
The S&P/Case-Shiller index of property values in 20 cities climbed 3 percent from September 2011, after advancing 2 percent in the year to August, the group said today in New York. The median forecast of 29 economists in a Bloomberg survey projected a 3 percent gain. Home prices from July through September climbed the most since the second quarter of 2010.
An improving labor market and record-low mortgage rates are shoring up demand for properties, helping explain an increase in optimism among builders. At the same time, Federal Reserve policy makers are pressing forward with monetary accommodation that underpins the residential real-estate recovery and the economic expansion.
With some pickup in employment, “you’re seeing that filter through to household formation with people becoming a little bit more comfortable and going out and dipping their foot in the water,” Kevin Cummins, an economist at UBS Securities LLC in Stamford, Connecticut, said before the report. “You have the indirect effects of stabilization in prices and home price appreciation that’s spilling over to spending and more broadly to confidence.”
Estimates in the Bloomberg survey ranged from gains of 2.2 percent to 3.6 percent. The Case-Shiller index is based on a three-month average, which means the September data were influenced by transactions in July and August.
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