U.S. house prices rose more than economists estimated in February as the strongest labor market in seven years gives Americans the confidence to bid on property.
Prices climbed 0.7 percent on a seasonally adjusted basis from January, the Federal Housing Finance Agency said in a report Wednesday. The average economist estimate was for a 0.5 percent increase, according to data compiled by Bloomberg.
Housing demand is climbing as consumer confidence hovers close to an eight-year high. A National Association of Realtors index that measures contracts to buy homes increased in February to the highest level for that month since 2006. The number of U.S. households jumped to 2 million at the end of 2014, a nine- year high.
“As we continue to see improvement and strengthening in the labor market we’re seeing better household formation numbers,” said Anika Khan, an economist with Wells Fargo Securities in Charlotte, North Carolina. “Jobs are the key to housing demand.”
In February and March, the unemployment rate was 5.5 percent, a level the Federal Reserve defines as “full employment,” meaning anyone who wants a job has one. The rate may fall to as low as 5 percent by the end of the year, according to projections from the central bank last month.
The gauge measures transactions for single-family properties financed with mortgages owned or securitized by Fannie Mae and Freddie Mac. It’s a repeat-sales index, meaning it tracks price changes on individual properties — a method many economists consider more accurate than using a national average of all sales.
The FHFA report doesn’t provide home prices. The median price for an existing home in February was $202,600, according to the National Association of Realtors.
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