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US home prices rise 5.5 pct. from year earlier, boosted by job growth and low mortgage rates

DEC 29, 2015

Steady job growth, low mortgage rates and tight inventories helped fuel rising U.S. home prices in October.

The Standard & Poor's/Case-Shiller 20-city home price index rose 5.5 percent in the 12 months ending in October, up from a 5.4 percent pace in September, according to a report released Tuesday.

Home values have climbed at a roughly 5 percent pace during much of 2015, as strong hiring has bolstered a real estate market still recovering from a housing bust that triggered a recession eight years ago. Home sales have increased this year as the 5 percent unemployment rate has strengthened confidence in the economy.

 

"The U.S. housing market as a whole made great progress in 2015, as the big and occasionally volatile bounce off the bottom we experienced from 2012 through 2014 gave way to a more stable and sustainable environment," said Svenja Gudell, chief economist at the real estate firm Zillow.

Rising demand, however, hasn't been met with an increase in sales listings, causing prices to rise much faster than inflation or wages this year. This could limit the number of first-time buyers coming into the market next year. Still, many buyers are also benefiting from 30-year, fixed-rate mortgages averaging less than 4 percent, making it cheaper to borrow for a home. Mortgage rates have historically been closer to 6 percent.

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