Subsidies Boost Home Prices More Than Expected

Low interest rates and reduced inventory levels continue to bode well for the housing market, as home prices increased more than expected in October.

Compared to the previous month, the S&P/Case-Shiller index of property values in 20 cities increased 0.7 percent on a seasonally adjusted basis in October, stronger than the 0.5 percent rise expected by economists. Las Vegas and San Diego logged the best one-month improvements, jumping 2.4 percent and 1.7 percent, respectively. Overall, 17 of the 20 cities in the index showed gains.

Prices also showed increases year-over-year. The S&P/Case-Shiller index gained 4.3 percent from October 2011, the biggest one year advance since May 2010 and better than the median forecast of 30 economists in a Bloomberg survey that projected a 4 percent gain.

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The best performing cities on an annual basis were Phoenix, Detroit and Minneapolis with price surges of 21.7 percent, 10.0 percent and 9.2 percent, respectively. San Francisco was close behind with an 8.9 percent gain. Meanwhile, New York and Chicago both declined more than 1.0 percent.

Is the housing recovery really gaining strength…