NEW YORK (Reuters) - Single-family home prices jumped in April, racking up their biggest annual gain in seven years in a sign of growing momentum in the housing recovery, a closely watched survey showed on Tuesday.
The S&P/Case Shiller composite index of 20 metropolitan areas gained 1.7 percent on a seasonally adjusted basis, topping forecasts for 1.2 percent.
Prices in the 20 cities accelerated by 12.1 percent year over year, which was also above expectations and the biggest annual gain since March 2006.
“The recovery is definitely broad based,” David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.
On a non-seasonally adjusted basis, prices in the 20 cities rose 2.5 percent, the biggest monthly gain in the index’s history, the report said.
A tightening of inventory available for sale, fewer foreclosures and buying from investors has helped push prices higher over the past year as the battered housing sector has gotten back on its feet.
U.S. stock index futures held on to their gains immediately after the data, while the dollar extended its advance against the euro. Ten-year Treasury securities prices were little changed in choppy trade.
Prices in all 20 cities were higher compared to a year ago, with Atlanta, Dallas, Detroit and Minneapolis seeing their biggest ever increases.
San Francisco led the group with a 23.9 percent gain in prices over April last year, while hard-hit Las Vegas surged 22.3 percent.
Returning demand from traditional buyers has also improved the market’s fortunes as homebuyers have been enticed by historically low mortgage rates.
A recent spike in rates has raised some concerns that could dampen demand. Still, most analysts don’t see the rise in rates as putting an end to the housing recovery and rates remain low by historical levels.
“Home buyers have survived rising mortgage rates in the past, often by shifting from fixed rate to adjustable rate loans,” said Blitzer.
“In the housing boom, bust and recovery, banks’ credit quality standards were more important than the level of mortgage rates.”
With some banks easing credit restrictions, “the recovery should continue,” he said.
The increase in rates has come as the Federal Reserve has signaled it expects to start slowing its $85 billion a month bond-buying program later this year. The program includes purchases of mortgage-backed securities.
Reporting by Leah Schnurr; Editing by Chizu Nomiyama