Seattle-area home prices jump again

Seattle-area home prices continue to climb, rising 2.7 percent in April from March, fueled by strong demand and limited supply.

The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday shows Seattle-area prices jumped 11.4 percent from the year before. The area was one of 12 cities nationwide to post double-digit gains.

The national average rose 2.5 percent increase in April from March, the biggest month-over-month gain on records dating back to 2000.

The biggest gainers over the past year were San Francisco, Las Vegas, Phoenix and Atlanta, which all had price increases of more than 20 percent.

The housing recovery is looking more sustainable and should continue to boost economic growth this year, offsetting some of the drag from higher taxes and federal spending cuts. Steady job gains and low mortgage rates have encouraged more people to buy homes.

“The housing market is improving,” said CBS News business editor Jill Schlesinger in an interview with The Morning News on KIRO Radio 97.3 FM. “I don’t think that prices will continue to rise as quickly because more people are going to list their homes, there will be more inventory. But the housing market is looking up in 2013.”

David Blitzer, chairman of the index committee, said the housing recovery should continue even with mortgage rates rising. Borrowing rates have jumped after Federal Reserve Chairman Ben Bernanke said last week that the Fed could slow its bond-purchase program, which is intended to keep long-term interest rates low.

“Homebuyer have survived rising mortgage rates in the past,” Blitzer said, “often by shifting from fixed rate to adjustable rate loans.”

Blitzer said the bigger issue for the housing market is banks’ willingness to lend. A recent survey by the Fed suggested some banks are easing credit standards.

Stan Humphries, chief economist for Zillow, said the price increases were not necessarily an indication of how the market is really doing. He said home values will have to slow their growth or risk falling altogether due to high home prices “no longer masked by rock bottom mortgage rates.”

“In general, the national housing recovery is strong and sustainable, but pockets of volatility will emerge as local fundamentals shift,” Humphries said. “Buyers expecting home values to continue rising at this pace indefinitely may be in for a shock.”

The index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The April figures are the latest available.

Prices are rising because demand is up and fewer homes are available for sale. That’s made builders more optimistic about their prospects, leading to more construction and jobs.

A measure of homebuilders’ confidence rose sharply in June to its highest level in more than seven years.

In May, sales of previously occupied homes jumped 4.2 percent to surpass the 5 million mark, the National Association of Realtors said last week. That’s the first time that’s happened in 3 and 1/2 years.

Excluding two months in 2009 when a homebuying tax credit spiked sales, home sales hadn’t topped 5 million since July 2007.

The Associated Press contributed to this report