Home prices rose more than economists estimated in October as rising employment and falling interest rates boosted buyer demand.
Prices climbed 0.6% on a seasonally adjusted basis from September, the Federal Housing Finance Agency said today in a report from Washington. The average of 21 estimates was for a 0.3% increase, according to data compiled by Bloomberg.
Prices rose 4.5% from a year earlier, a streak that dates to June 2012, according to the report. The pace of increases slowed last year after higher prices and a spike in interest rates made housing less affordable.
“The housing recovery has been a bit weaker than many were hoping for this year,” Paul Ashworth, chief U.S. economist with Capital Economics Ltd., wrote in a note yesterday from Toronto. “With mortgage rates starting from very low levels and credit conditions easing, albeit very gradually, the housing recovery should pick up a little more pace in 2015.”
Capital Economics expected prices to rise 0.5% in October.
Mortgage rates returned this month to their lowest level since May 2013, when borrowing costs began soaring after the Federal Reserve announced plans to slow purchasing of Treasury Bonds and mortgage-backed securities.
According to the FHFA report, prices rose the most for the month in the East North Central states of Michigan, Wisconsin, Illinois, Indiana and Ohio, where the increase was 1.1%. Prices were up 5.1% for the year in the region.
The biggest decline from September was in the Pacific area, including California, with a 0.3% drop. For the year, the region was the biggest gainer, with prices up 6% from October 2013.
Prices in the Middle Atlantic region of New York, New Jersey and Pennsylvania fell 0.1% for the month and climbed only 0.8% for the year, the smallest annual regional increase.
The FHFA index measures transactions for single-family properties financed with mortgages owned or securitized by Fannie Mae and Freddie Mac. The measure, which doesnt include a median price for transactions, is 5.1% below its April 2007 peak and about the same as the September 2005 level.
The median sale price of an existing single-family home in November was $205,300, up 5% from a year earlier and down from this years high of $222,000, in June, the National Association of Realtors said in a report yesterday. Homes sold at an annual pace of 4.93 million, down from October’s pace of 5.25 million and up from 4.83 million a year earlier.