Annualized U.S. single-family home prices rose in September at a faster pace than in August and above market expectations, a closely watched survey showed on Tuesday.
The S&P/Case Shiller composite index of 20 metropolitan areas gained 5.5 percent in September on a year-over-year basis compared with 5.1 percent in the year to August. It was above the 5.1 percent estimate from a Reuters poll of economists.
“The general economy appeared to slow slightly earlier in the fall, but is now showing renewed strength. With unemployment at 5 percent and hints of higher inflation in the CPI, most analysts expect the Federal Reserve to raise its fed funds target range to 25 to 50 basis points, the first increase since 2006,” said David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.
“While this will make news, it is not likely to push mortgage rates far above the recent level of 4 percent on 30 year conventional loans. In the last year, mortgage rates have moved in a narrow range as home prices have risen; it will take much more from the Fed to slow home price gains.”