US home prices rise at a solid clip in December

AP News
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Posted: Feb 23, 2016 9:57 AM
US home prices rise at a solid clip in December

WASHINGTON (AP) — U.S. home prices increased at a solid clip in December, helped by a healthy job market and low mortgage rates.

The Standard & Poor's/Case-Shiller 20-city home price index rose 5.7 percent from a year earlier, same as the annual increase in November.

Prices rose 11.4 percent in Portland, Oregon; 10.3 percent in San Francisco and 10.2 percent in Denver. Washington, District of Columbia, registered the lowest annual increase, just 1.7 percent.

In December, the index reached the highest level since February 2008 — but it remained nearly 12 percent below its July 2006 peak.

Jim O'Sullivan, chief U.S. economist at High Frequency Economics, characterized the price gains as "still fairly strong ... the data continue to show a solid uptrend in home prices."

Mortgage rates remain near historic lows more than two months after the Federal Reserve raised short-term interest rates for the first time since 2006. Unemployment has fallen to an eight-year low 4.9 percent.

David Blitzer, chairman of the index committee at S&P Dow Jones, said steady price increases would encourage builders to start putting more new homes. Last year, construction companies broke ground on 1.1 million properties, most since 2007.

Builders have been focusing on apartment complexes to take advantage of rising rents. But the real estate data firm Zillow said Tuesday that growth in home rental prices slowed in January, rising a seasonally adjusted 2.9 percent from a year earlier and cooling even in hot markets such as San Francisco and Denver.