U.S. home prices rose faster in October than the previous month as many would-be buyers competed for a limited supply of available properties.
The S&P CoreLogic Case-Shiller 20-city home price index rose 2.2% in October from a year ago, up from a 2.1% annual gain in September.
The Tuesday report suggests that home price increases are being revived after the pace of gains hit a seven-year low in July. The Federal Reserve's three cuts to short-term interest rates in 2019 have accelerated sales of new and existing homes. The sales pickup may now be pushing up prices more quickly.
A newly constructed single family home is shown as sold in Encinitas, California, July 31, 2019.
Mike Blake | Reuters
The cities with the largest price gains were Phoenix, where prices rose 5.8%, followed by Tampa, at 4.9%, and Charlotte at 4.8%. The pick-up in prices was broad-based: Twelve of the 20 cities in the index reported faster annual home price gains in October than in September.
Craig Lazzara, managing director at S&P Dow Jones Indices, which compiles the index, warned that it is still too soon to say whether home price increases have fully reversed their slowdown or if the past two months are just a blip.
Mortgage rates have fallen from roughly 4.6% to 3.7% in the past year. That's lifted sales of existing homes 2.4% from a year earlier and sales of new homes by more than 7%.
"Teamed with a resilient job market, low mortgage rates have helped boost home buyer demand," said Matthew Speakman, an economist at real estate data provider Zillow. "An extreme shortage of for-sale listings, particularly at lower price points, remains a concern and may ultimately result in a sharper re-acceleration in home prices than expected."