US home prices rising 2 times faster than wages


Home prices in the 20 largest American cities grew by 5.9 per cent, led by Seattle, which posted a 12.3 per cent gain, easily the most of any city.

More specifically, this 20-city home price index-which the agency released Tuesday-increased almost 6 percent over the course of the past 12 months (ending in March).

Prices of homes continued to accelerate the fastest in regions of the country where the technology sector is booming, while the supply of homes available for sale is constrained.

The 20-city property values index rose 5.9% from March 2016 (the forecast was 5.7%), matching February as the biggest since July 2014.

Much like last month, Blitzer said real estate agents and professionals must temper any excitement they have about the red hot buying season they're now experiencing because as the old adage says: "What goes up, must come down".

"People are staying in their homes longer rather than selling and trading up", said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.

Two leading data sources are reconfirming the seemingly endless ascension of home prices. This would keep inventories low, and put more pressure on prices.

Economists are concerned, however, about a handful of markets that have been seeing double-digit or near-double-digit growth.

South Florida home prices increased 6 percent in March compared to a year ago - a middle-of-the-pack gain compared with other major metropolitan areas nationwide. Dallas, which recently replaced Denver in the top three, reported a 8.6% annual increase in home prices. Eighteen of the 20 cities reported increases in March before seasonal adjustment; after seasonal adjustment, 17 cities saw prices rise. The seasonally adjusted 20-city index rose 0.9% from a month earlier (matching the forecast).

Both the Ten-City Composite and the 20-City Composite indices posted a 0.9% month-over-month increase after seasonal adjustment.

"Over the past year, analysts suggested that one factor pushing prices higher was the unusually low inventory of homes for sale", Blitzer said. New home sales dropped 10.4% last month due to similar challenges, according to the Commerce Department.