U.S. home prices kept climbing in March as the spring home buying season began, but so far the higher costs haven't thwarted sales.
The Standard & Poor's/Case-Shiller 20-city home price index increased 5.4 percent in March compared with a year earlier, according to a report released Tuesday. That is the same annual gain as in February.
Solid job growth, modest increases in wages and salaries, and low mortgage rates are fueling Americans' willingness to buy homes. Yet there is also a limited supply of homes on the market, which pushes up prices.
David Blitzer, chairman of the S&P index committee, said the number of homes on the market is equal to less than 2 percent U.S. households, the lowest percentage since the mid-1980s.
The number of available homes fell 3.6 percent in April, according to the National Association of Realtors.
"It remains a tough home buying season for buyers, with little inventory available among lower-priced homes," Svenja Gudell, chief economist at real estate data firm Zillow. "The competition is locking out some first-time buyers, who instead are paying record-high rents."
Even so, sales of existing homes rose 1.7 percent in April, the second straight increase, to an annual rate of 5.45 million.
Portland, Seattle and Denver saw the highest yearly gains. Prices rose 12.3 percent in Portland, 10.8 percent in Seattle, and 10 percent in Denver. All three cities feature burgeoning technology sectors and strong job gains.
Prices rose in all 20 cities, but at a slower pace in the Northeast and Midwest. The cities with the smallest year-over-year increases were Washington, D.C., Chicago, New York and Cleveland.
A revived housing market is helping fuel faster economic growth. Sales of new homes jumped to their highest level in eight years in April, and home construction has also increased.
The economy is picking up after a dismal start to the year. Americans stepped up their spending in April at the fastest pace in six years, the government said Tuesday. The Federal Reserve Bank of Atlanta now expects growth to reach 2.9 percent at an annual rate in the April-June quarter, up from just 0.8 percent in the first three months of the year.
Mortgage rates remain at historical lows: A 30-year fixed rate mortgage averaged just 3.64 percent last week.
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