Home price growth accelerated in September as a strong economy boosted demand for homes and supply failed to keep pace.
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The S&P CoreLogic Case-Shiller National Home Price Index, which covers the entire nation, rose 6.2% in the 12 months ended in September, up from a 5.9% annual increase in August.
The September figure was the fastest annual rate since June 2014.
The existing-home market has presented a mixed picture in recent months of robust price gains coupled with lackluster sales activity. Inventory is especially constrained in the bottom third of the market, where prices are growing twice as quickly as the top third, said Svenja Gudell, chief economist at Zillow.
"In order for the market to be healthy you would want to see more stable supply," Ms. Gudell said, along with renters converting more easily to buyers.
Existing-home sales increased 2% in October from a month earlier to a seasonally adjusted annual rate of 5.48 million, the National Association of Realtors said Tuesday. But sales dipped 0.9% from the same month a year earlier, the second consecutive decline on an annual basis.
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The new-home market has shown more strength. Sales of newly built homes rose 6.2% in October, the second consecutive month of strong gains, driven by strong demand for starter homes.
Wage growth, low unemployment and easing standards for mortgage credit all have helped drive housing demand.
But builders haven't kept pace, and new-home construction remains well below the historical average. That is likely to continue pushing prices up quickly in coming months, economists said.
"Most economic indicators suggest that home prices can see further gains, " said David Blitzer, managing director at S&P Dow Jones Indices. "One dark cloud for housing is affordability -- rising prices mean that some people will be squeezed out of the market."
The 10-city home price index increased 5.7% over the year, up from 5.2% in August. The 20-city index jumped 6.2%, up from 5.8% the previous month.
Sixteen cities experienced accelerating annual price increases in September from the previous month and eight cities recorded record highs. Seattle reported the largest annual gain, at 12.9%, followed by Las Vegas at 9% and San Diego at 8.2%.
While affordability is a growing concern in large coastal cities, many areas remain well below the previous peaks, and continued price gains are welcome news for many homeowners.
"There's still a lot of Americans that are still reeling from the credit crisis," said Sam Dunlap, a senior portfolio manager with Angel Oak Capital Advisors, a mutual-fund firm specializing in mortgage-backed securities. "Not all of these cities have had such robust gains like Seattle and San Francisco. There are still areas that have a lot of room to run."
Month-over-month, the U.S. Index rose 0.4% in September before seasonal adjustment, while the 10-city increased 0.5% and the 20-city index edged up 0.4% from August to September.
After seasonal adjustment, the national index rose 0.7% month-over-month, the 10-city index experienced a 0.6% increase and the 20-city index rose 0.5%.
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(END) Dow Jones Newswires
November 28, 2017 11:18 ET (16:18 GMT)