January 23, 2013 2:43 pm

Tight supplies boost US home prices

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US home prices edged higher in November as supplies tightened amid increasing numbers of sales, pointing to further traction in the housing sector.

The Federal Housing Finance Agency’s house price index, which covers single-family homes using data provided by government agencies Fannie Mae and Freddie Mac, rose 0.6 per cent.

Economists surveyed by Bloomberg had expected a 0.7 per cent rise. Prices rose 0.5 per cent in October.

Compared with the same period in the prior year, prices are up 5.6 per cent, according to the index.

“The improvements in the FHFA index are very much in line with what we have seen in other home price indices recently and point toward further momentum in US house prices heading into year end,” said Michael Gapen, senior US economist and asset allocation strategist at Barclays. “We look for this momentum to continue into 2013.”

Recent improvement in the labour market, record-low mortgage interest rates and increased consumer optimism have spurred home purchases.

Existing home sales in 2012 rose 9.2 per cent to 4.65m from the year before, the National Association of Realtors said on Tuesday. That was the highest volume since 2007, when sales reached 5.03m, and was the strongest increase since 2004.

This is turn has reduced supplies to the lowest since 2005 and boosted home prices. NAR data also showed the median price of an existing home was $180,800 in December, 11.5 per cent higher than the same month in 2011.

Even as home prices continue to rise, they are still more than 15 per cent below their 2007 peak. In some regions prices remain 30 per cent below their highs.

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