Home prices in 20 U.S. cities rose less than forecast in February from a year earlier, which bodes well for prospective buyers.
The S&P/Case-Shiller index of property values in 20 cities increased 5.4 percent from February 2015, the smallest gain since October, after climbing 5.7 percent in the year ended in January, a report from the group showed Tuesday in New York. The median projection of 25 economists surveyed by Bloomberg called for a 5.5 percent advance. Nationally, prices rose 5.3 percent year-over-year.
Measured price gains may bring home ownership within reach of more Americans, especially first-time buyers and those with low incomes. The additional support is needed, especially with wages remaining sluggish, as recent reports showed demand lacked momentum heading into the busiest selling season of the year.
More moderate price growth “would re-energize the housing market,” Thomas Costerg, a senior U.S. economist at Standard Chartered Bank in New York, said before the report. “Prices will see slower appreciation. Hopefully, incomes will accelerate and affordability will improve. We need housing strength at this time” when manufacturing and exports are weighing on the economy.
Economists’ estimates in the Bloomberg survey ranged from gains of 5.3 percent to 5.8 percent.
All 20 cities in the index showed a year-over-year gain, led by an 11.9 percent increase in Portland, Oregon. Seattle and Denver showed the second- and third-fastest rates of appreciation. Dallas
The year-over-year gauge provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.
“The pace is easing off in the most recent numbers,” David Blitzer, chairman of the S&P index committee, said in a statement.
On a monthly basis, home prices in the 20-city index adjusted for seasonal variations climbed 0.7 percent. Just half posted increases that were larger than in January. The Bloomberg survey median called for a 0.8 percent increase. Unadjusted values increased 0.2 percent from the previous month.
Recent reports on residential real estate have been mixed, indicating the industry lacked momentum heading into the busy spring selling season. New home sales unexpectedly declined for a third month in March, falling 1.5 percent to an annualized rate of 511,000 houses. The market for previously owned homes improved last month, climbing 5.1 percent to a 5.33 million annualized rate.
In addition, residential starts slumped in March, and home builder sentiment was little changed in April, other figures showed.