U.S. house prices rose 6.5 percent in the year through January, the biggest jump since 2006, as values surged on the West Coast and in the area including Nevada and Arizona, the Federal Housing Finance Agency said.
Prices increased 0.6 percent on a seasonally adjusted basis from December, the FHFA said in a report today from Washington. The average economist estimate was for a 0.7 percent gain, according to data compiled by Bloomberg.
Home prices are rising as low borrowing costs and improving employment bolster demand and the inventory of properties for sale shrinks. Prices haven’t declined on a monthly basis since January 2012, the FHFA said, indicating that the recovery has solidified.
“Pretty much across the board, prices are rising,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said in a phone interview today. “That will be the trend in all 50 states by the end of the year. The forces that are driving up prices are national ones.”
Prices jumped 14.1 percent from a year earlier in the Mountain area, which includes Arizona, Nevada, Montana and New Mexico. In the Pacific region, including California and Washington, the gain was 13.7 percent, the FHFA said. The Middle Atlantic area -- New York, New Jersey and Pennsylvania -- had the smallest increase, at 0.4 percent.
Morgan Stanley expects U.S. home prices to rise as much as 8 percent this year, up from previous estimates of 4 percent to 6 percent, analysts led by Vishwanath Tirupattur said in a note two days ago. JPMorgan Chase & Co. and Bank of America Corp. have also raised their home-price forecasts this month.
Rising values are helping homeowners to regain equity. At the end of the fourth quarter, 10.4 million homes, or 21.5 percent of all residential properties with a mortgage, were underwater, with owners owing more than the property was worth, CoreLogic Inc. reported this week. That was down from 10.6 million homes, or 22 percent, at the end of September.
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