The increase beat the 0.4 percent gain that was the average estimate of 19 analysts in a Bloomberg survey. Prices jumped 3 percent from a year earlier, the FHFA said in a statement today.
Job gains, low interest rates and a tight supply of homes for sale are boosting property prices following the worst slump since the Great Depression. Home seizures in May fell 18 percent from a year earlier even as initial notices of default rose, a sign that banks are turning to alternatives to foreclosures that depress values, RealtyTrac Inc. said on June 14.
“Favorable levels of valuations and mortgage affordability mean that the foundations for a sustainable improvement in housing are firmly in place,” Paul Diggle, an economist with Capital Economics Ltd., wrote in a report yesterday in which he predicted an increase in prices this year.
The FHFA index, which measures price changes of single- family houses, showed increases in six of the nine regions covered on a seasonally adjusted basis. The monthly gain was led by a 2.2 percent jump in the area that includes California and Oregon. Prices fell 1.2 percent in the region that includes Massachusetts and Maine.
The U.S. gauge is 18 percent below its 2007 peak and is at roughly the same level it was in April 2004, the FHFA said.
Confidence among homebuilders is improving and permits, a proxy for future construction, climbed to the highest level since 2008, the Commerce Department reported June 19.
A recovery remains uneven. Sales of previously-owned homes fell 1.5 percent in May to a 4.55 million annual rate, figures from the National Association of Realtors showed today.
The FHFA report is based on changes in real estate values using purchases of properties with mortgages backed by Fannie Mae (FNMA) or Freddie Mac. (FMCC) It doesn’t provide a specific price for homes. The median home price, as measured by the National Association of Realtors, was $177,400 in April.
To contact the editor responsible for this story: Kara Wetzel at email@example.com