US house prices rise more than expected

House prices in the US rose more than expected in March, according to the S&P/Case-Shiller National Home Price Index.

The S&P/Case-Shiller 20-City Composite index was up 5.4% in March compared to the same month last year, unchanged from the previous month and beating expectations of a 5.2% increase.

Prices were up 0.9% from February, ahead of estimates for a 0.8% jump.

David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said: “The economy is supporting the price increases with improving labour markets, falling unemployment rates and extremely low mortgage rates.

“Another factor behind rising home prices is the limited supply of homes on the market.”

Denver, Seattle and Portland recorded the highest year-over-year increases.

Pantheon Macroeconomics said: “The month-on-month CS numbers tend to lag the median price data from the existing home sales report, so we have to expect the rate of increase to slow sharply over the next few months. The underlying trend in home prices remains upwards, given the tightness of inventory, but it's very likely that rising sales over the summer will be accompanied by reports of much smaller price gains or even modest declines.

"We won't take these numbers very seriously. Our base case is that prices will rise by 6-to-8% over the next year, ensuring that implied real mortgage rates remain substantially negative.”