By Laura Kusisto
Home prices climbed strongly in November, as price growth showed no signs of slowing even after mortgage rates began to tick up during the month.
The S&P CoreLogic Case-Shiller Indices covering the entire nation rose 5.6% in the 12 months ended in November, up slightly from the revised 5.5% year-over-year increase reported in October.
The 10-city index gained 4.5% over the year, up from 4.3% last month, and the 20-city index gained 5.3% year-over-year, up from a 5.1% increase in October.
The rise matched the expectation of economists surveyed by The Wall Street Journal, who expected the 20-city index to rise 5.3%.
The hottest markets in the country remain concentrated in the northeast, as many buyers pricedout of the Silicon Valley area flee to secondary tech hubs. Seattle led the way with a 10.4% increase, Portland reported a 10.1% year-over-year gain and Denver had an 8.7% annual increase in home prices.
Home prices set a record in September and have continued climbing by more than 5% year-over-year since then.
"One can argue that housing has recovered from the boom-bust cycle that began a dozen years ago," said David Blitzer, managing director at S&P Dow Jones Indices.
The volume of sales has cooled in recent months, as rising mortgage rates have collided with higher prices and a shortage of inventory. Purchases of previously owned homes slid 2.8% in December from a month earlier, the National Association of Realtors said last Tuesday. U.S. new home sales dropped by 10.4% in December, the Commerce Department said Thursday.
Case-Shiller offers a lagging indicator of the housing market and November's numbers reflect onlythe beginning of a sharp increase in mortgage rates that began around the U.S. presidential election in November. Average rates for 30-year fixed mortgages rose from roughly 3.5% around Election Day to 4.32% at the end of December, according to mortgage company Freddie Mac. In the past week they averaged 4.19%, Freddie Mac said last Thursday.
Higher mortgage rents tend to put a damper on price growth because they drive up the monthly cost of a mortgage. That combined with the fact that prices have risen faster than incomes could pose challenges to the market this year.
Month-over-month prices the U.S. Index rose 0.2% in November before seasonal adjustment, while the 10-city and the 20-city index also increased 0.2% from October to November.
After seasonal adjustment, the national index rose 0.8% month-over-month, while both the 10-city and 20-city index rose 0.9% month-over month.
Write to Laura Kusisto at email@example.com
(END) Dow Jones Newswires
January 31, 2017 09:15 ET (14:15 GMT)
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