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[WASHINGTON] Home prices in 20 US cities rose at a slower pace in the year ended in November, a sign the industry struggled to find momentum even amid low mortgage rates.
The S&P/Case-Shiller index of property values increased 4.3 per cent from November 2013 after rising 4.5 per cent in the year ended in October, the group said Tuesday in New York. The median projection of 28 economists surveyed by Bloomberg called for a 4.3 per cent year-over-year advance. Nationally, prices rose 4.7 per cent after a 4.6 per cent gain in the year ended in October.
Property prices slowed over the last year as home sales cooled, with demand stymied by sluggish wage growth and less household formation. More moderate price gains, combined with improvement in the labor market and low borrowing costs, may enable a wider swath of Americans to become buyers, providing a needed jolt to the industry.
"Home-price appreciation continued last year, but at a slower pace compared with 2013," said Ryan Wang, an economist at HSBC Securities USA Inc in New York and the second-best forecaster of the Case-Shiller index over the last two years, according to data compiled by Bloomberg.
"Going into this year, we'll see a moderate increase in home prices. Mortgage rates have fallen, and that may help sales pick up a bit."
Economists' estimates in the Bloomberg survey ranged from gains of 3.9 per cent to 4.8 per cent. 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.
Another Tuesday report showed orders for US durable goods unexpectedly decreased in December. Bookings for goods meant to last at least three years fell 3.4 per cent after a 2.1 per cent decline the prior month, a Commerce Department report showed in Washington.
Home prices in the 20-city index adjusted for seasonal variations increased 0.7 per cent in November from the prior month, little changed from the previous month's increase. The Bloomberg survey median called for a 0.6 per cent gain.
All 20 cities in the index showed a year-over-year increase, led by gains of 8.9 per cent in San Francisco and 8.6 per cent in Miami. Cleveland showed the smallest increase, at 0.6 per cent.
The year-over-year gauge, which uses records dating back to 2001, 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.
"Difficulties facing the housing recovery include continued low inventory levels and stiff mortgage qualification standards," David Blitzer, chairman of the S&P index committee, said in a statement.
Property prices before seasonal adjustment rose in 11 of 20 U.S. areas in November from a month earlier, led by a 0.8 per cent jump in Tampa. Adjusted prices rose in all 20 cities.
Borrowing costs that have plunged this year amid a drop in long-term interest rates may help make homeownership a more affordable option for some Americans. The average rate on a 30- year fixed mortgage was 3.63 per cent in the weekend ended Jan 22, the lowest since May 2013, according to Freddie Mac data. The rate has dropped by 0.24 per centage point in just the first three weeks of 2015, compared with a 0.7 point decline in all of last year.
When combined with gains in employment and consumer confidence, lower borrowing costs will help put the housing market on better footing in the months to come.
Existing home sales totaled 4.93 million in 2014, down 3.1 per cent from the 5.09 million houses sold the year before, figures from the National Association of Realtors showed last week. Meanwhile, builders broke ground in December on the most single-family homes in almost seven years, signaling construction will contribute more to economic growth this year.
That bolsters the outlook of more than just homebuilders, who are optimistic pent-up demand for homes will help the industry this year. Companies such as Toyota Motor Corp. may also benefit.
" A rise in housing starts bodes well for the light truck and pickup truck market sales," Bob Carter, senior vice president of Toyota's US operations, said at a Jan. 14 industry conference. "When homebuilding picks up, construction companies hire more people and those people go out and buy trucks to get the job done."