U.S. home prices rose in December at a faster pace than the previous month, likely because of a much smaller number of homes for sale.
The Standard & Poor’s/Case-Shiller 20-city home price index, released Tuesday, increased 4.5 percent in December compared with 12 months earlier. That is up from 4.3 percent in November and the same as October’s annual increase. The small gain comes after price increases had slowed for 12 straight months.
Americans are listing fewer homes for sale, pushing up prices and keeping many houses out of reach for would-be buyers. Home prices are rising faster than most Americans’ wages, slowing sales even as hiring strengthens, consumer confidence grows and mortgages stay low.
Still, the smaller price gains are more sustainable and less harmful for potential buyers than last year’s double-digit increases.
The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The December figures are the latest available.
The number of homes for sale in December was equal to just 4.4 months of sales, the lowest level in nearly two years. Six months of supply is typical for a healthy housing market.
“The housing recovery is faltering,” said David Blitzer, chairman of the S&P’s index committee. “While prices and sales of existing homes are close to normal, construction and new-home sales remain weak.”
All 20 cities reported higher prices than a year earlier. The biggest gains were in San Francisco, where prices rose 9.3 percent, and Miami, where they jumped 8.4 percent. Chicago reported the smallest gain, at 1.3 percent.
December’s price rise is far ahead of wage gains. Average hourly wages rose at a faster pace in January compared with the previous month, but were just 2.2 percent higher than a year ago. Pay gains have been stuck largely at that level for most of the five years since the recession.
Sales of existing homes fell last year after two years of steady recovery. That has led many economists to forecast a rebound in sales in 2015, but thus far there are few signs of it.
In January, existing-home sales tumbled 4.9 percent to a seasonally adjusted annual rate of 4.82 million, the slowest pace in nine months, the National Association of Realtors said Monday.
And the construction of new homes fell 2 percent in January, the Commerce Department said last week.
Lower mortgage rates and strong job growth may yet spur more sales later this year. The average 30-year fixed mortgage rate was 3.76 percent last week, according to the mortgage giant Freddie Mac. That has ticked up in recent weeks, but is far below the 4.33 percent average from a year ago.
Employers have ramped up hiring, encouraged by strong growth last spring and summer. The U.S. economy added more than 1 million jobs from November through January, the fastest three-month pace in 17 years. More Americans earning paychecks should eventually push home sales higher.