US home prices march upward as buyers fight over low supply

WASHINGTON — U.S. home prices rose in April from a year earlier, lifted by bidding wars in many cities where would-be buyers fought over a sparse supply of homes.

The S&P CoreLogic Case-Shiller 20-city home price index moved up 6.6 per cent from a year earlier, led by outsize gains in Seattle, Las Vegas and San Francisco. All three cities showed double-digit increases.

Prices rose even as home sales fell and mortgage rates climbed. Sales of existing homes dropped in April and May and are now running 3 per cent below their year-ago level. Fewer homes are available — the supply has fallen 6.1 per cent in the past year — and they are selling quickly.The average house for sale remained on the market for just 26 days in April, down from 39 a year ago.

Mortgage rates reached a seven-year high of 4.77 per cent in late May before declining this month. Last week, the 30-year fixed mortgage rate averaged 4.57 per cent, according to Freddie Mac. That is still much higher than a year ago, when it was 3.9 per cent.

The economy is growing and the unemployment rate is at an 18-year low, which typically would point to stronger home sales. Americans are increasingly turning to newly-built homes, where sales jumped 6.7 per cent in May. But higher prices and fewer existing homes to choose from are cutting many Americans out of the housing market.

Prices rose at a healthy pace in Denver, where they were 8.6 per cent higher than a year ago; Los Angeles, where they were 8.3 per cent higher; and San Diego, 7.8 per cent.

The smallest gains were in Chicago, up 3 per cent; Washington, D.C., up 3.2 per cent; and New York, up 4 per cent.

The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The April figures are the latest available.

Christopher Rugaber, The Associated Press