Home prices jump 12.1% in April, biggest year-to-year gain since ’06

Prices for U.S. homes rose in April, posting record monthly growth and the fastest year-over-year growth in seven years, according to Standard & Poor’s/ Case-Shiller data released Tuesday.

The S&P/Case-Shiller index of property values jumped 12.1 percent from April 2012, the biggest year over-year gain since March 2006, after advancing 10.9 percent in March.

Short supply, record-low mortgage rates and an improving job market combined to increase housing demand and spark the rebound in prices. The recovery is probably far enough along to overcome the recent uptick in mortgage interest rates after Federal Reserve policymakers said they may trim accommodative measures meant to spur the expansion, analysts say.

“Housing’s doing really well, and I don’t think thebackup in mortgage rates to date is going to derail it,” said Brian Jones, senior U.S. economist in New York at financial-services company Societe Generale. “We’re still well off the highs, but price increases could continue for the next several years.”

All of the 20 cities in the index showed an increase in year-over-year prices, led by gains of 23.9 percent in San Francisco and 22.3 percent in Las Vegas. The smallest gain was in New York, which showed a 3.2 percent advance.

“The recovery is definitely broad-based,” David Blitzer, chairman of the S&P index committee, said in a statement. “Recent economic data on home sales and inventories confirm the housing recovery’s strength.”

The price-index results follow other signs that housing has strengthened in the second quarter even as the economy shows signs of slowing. Beginning construction of new homes climbed last month as permits to build single-family houses rose to the highest level since May 2008, the Commerce Department reported June 18.

Sales of new homes rose in May to the fastest pace in five years, the Commerce Department reported Tuesday.

New-home sales rose 2.1 percent last month compared with April to a seasonally adjusted annual rate of 476,000, the highest level since July 2008

The median price of a new home sold in May was $263,900, up 3.3 percent from a year ago.

Sales of new homes remain below the 700,000 annual rate that’s considered healthy by most economists. But the pace has increased 29 percent from a year ago.

Analysts say the housing recovery is looking more sustainable and should continue to spur economic growth this year, offsetting some drag from higher taxes and federal spending cuts.

The sales gains in May were led by a 40.7 percent increase in the Midwest followed by a 20.7 percent gain in the Northeast. Sales also were up 3.6 percent in the West, but they fell 9 percent in the South.

The inventory of unsold homes rose 2.5 percent to 161,000 in May, the highest level since August 2011 but still just 13 percent higher than the record low for inventories set in July 2012. Prices of new homes have been rising in part because more people are bidding on a limited number of homes.

“The housing recovery is alive and well,” said Joe La-Vorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. “‘It’s given the economy, or will give the economy, a lot of oomph.”

Sales of previously owned U.S. homes climbed 4.2 percent in May to an annualized rate of 5.18 million, the highest level since November 2009, figures from the National Association of Realtors showed last week. The median selling price surged from a year ago by the most since October 2005, the group said.

Traction in the residential real estate recovery is supporting home builders’ positive outlook. The National Association of Home Builders/ Wells Fargo index of builder sentiment rose eight points, the biggest monthly increase since September 2002, to 52 in June. Readings above 50 mean more respondents said conditions were good.

The sustained growth in demand is lifting companies such as lumber producer Weyerhaeuser Co. of Federal Way, Wash., and building confidence in the housing market’s return to pre-recession levels.

“We are, as we discussed in May, seeing a recovery in housing,” Chief Executive Officer Daniel Fulton said on a June 17 conference call. “We believe we are on our path to long-term recovery to trend levels.” Information for this article was contributed by Michelle Jamrisko, Kristy Scheuble and Jeanna Smialek of Bloomberg News; by Martin Crutsinger of The Associated Press; and by Ruth Mantell of MarketWatch.