Home prices rose strongly in March, the latest sign the housing market has momentum heading into the critical spring selling season.
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The S&P/Case-Shiller Home Price Index, covering the entire nation rose 5.2% in the 12 months ended in March, slightly less than a 5.3% increase in February.
The 10-city index gained 4.7% from a year earlier and the 20-city index gained 5.4% year-over-year.
Economists surveyed by The Wall Street Journal expected a 5.4% increase in the 20-city index.
After years of volatility, home prices have grown at a rate around 5% since early 2015. That bodes well for sellers heading into the peak home-selling season in May and June but could pose challenges for buyers, especially first-timers who may be priced out of the market.
The hottest markets in the country, primarily on the West Coast, continued to show double-digit price gains, with Portland reporting a 12.3% year-over-year gain, Seattle showing a 10.8% gain, and Denver with a 10% increase
Month-over-month prices the U.S. Index rose 0.7% in March before seasonal adjustment; the 20-city index rose 0.9% and the 10-city index rose 0.8% from February to March.
After seasonal adjustment, the national index rose 0.1% month-over-month, the 10-City index posted a 0.8% increase, and the 20-City index reported a 0.9% month-over-month increase.
The housing market has been stymied throughout the recovery by a lack of inventory and new home construction that has driven prices up but kept the volume of sales low. In recent weeks though it has shown recent signs of gaining broader strength.
Last week, the National Association of Realtors said the number of homes that in April went under contract to be sold climbed to the highest level in over a decade.
U.S. new-home sales also posted their strongest month in more than eight years with a 16.6% jump from a month earlier, the Commerce Department said last Tuesday.
"The economy is supporting the price increases with improving labor markets, falling unemployment rates and extremely low mortgage rates," said David Blitzer, managing director at S&P Dow Jones Indices.
Nonetheless, a lack of supply of homes for sale remains a concern. The number of homes currently on the market is less than 2% of the number of households in the U.S., the lowest percentage seen since the mid-1980s, according to Mr. Blitzer.
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