Home Prices Post Best Yearly Increase Since 2006

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U.S. single-family home prices rose in January, starting the year with the biggest annual increase in 6½ years in a fresh sign that the housing market recovery remains on track, a closely watched survey showed on Tuesday. The S&P/Case Shiller composite index of 20 metropolitan areas gained 1 percent month-on-month in January on a seasonally adjusted basis, topping expectations for 0.9 percent. Prices have been gaining since last February. On a non-seasonally adjusted basis, prices rose 0.1 percent.

Prices in the 20 cities climbed 8.1 percent year-over-year, also beating expectations for 7.9 percent. It was the biggest yearly increase since June 2006, when housing prices were on their way down as the market was starting to collapse. Average home prices were back to their autumn 2003 levels, though that still leaves them down about 30 percent from the 2006 peak.

All of the 20 cities showed gains on a yearly basis, with New York rising for the first time in over two years. Phoenix continued the strong rebound seen last year, rising 23.2 percent from the year before. Eight cities racked up double-digit gains, including San Francisco, up 17.5 percent, and Las Vegas, up 15.3 percent.

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Home Prices Post Best Yearly Increase Since 2006

Median list price: $224,900

A steady job market has kept demand for homes healthy in Iowa City, MarketWatch said. Iowa's low unemployment rate of 3.6 percent in December means more people can afford to buy. Inventory has been dropping rapidly in Iowa City, dropping 10 percent in January from a month prior. The number of homes for sale in every price range has been decreasing for the last 18 months, MarketWatch reported. That means sellers have their pick of buyers looking for homes.

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Median list price: $349,000
Median days homes are on the market: 56

Homes listed in Seattle spend about half the time on the market than they do nationally, and competition among buyers is helping to bid up home prices. There were less than 4,000 homes for sale in Seattle in January, MarketWatch reported, driving homebuyers to act fast on purchases.

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Median list price: $429,900
Median days homes are on the market: 29 (December)

In Washington, D.C., a monthly mortgage payment can cost less than local rental prices, so first-time homebuyers are taking advantage of that. There's also an influx of foreign buyers and investors snapping up homes. All of this means there's a lot of opportunity for sellers, MarketWatch said. It also doesn't hurt that inventory in the metro area is at a record low -- which means it's definitely a seller's market.

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Median list price: $209,500
Median days homes are on the market: 58

Home values are getting warmer in the hot-weather town of Phoenix. The median list price is up 23.6 percent from a year ago, and many underwater homeowners are coming out of negative equity. That's making it easier for them to sell. There's also quite a but of buyer interest coming from an unlikely source: people who sold their homes in short sales and are now using the money to buy once again, MarketWatch said.

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Median list price: $729,000
Median days homes are on the market: 58

Sellers in San Francisco have a pretty good problem on their hands: who to sell their homes to. Competition is fierce, with many sellers fielding more than 10 offers apiece on their properties, according to MarketWatch. The median days that a home sits on the market in San Francisco is below the national figure of 108. And a boom in tech jobs is bringing in scads of new workers who are looking to buy homes.

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The dollar slightly pared losses against the euro shortly after the data, while Treasures prices held steady at lower levels. U.S. stock index futures saw little reaction and Wall Street was poised to open higher. The housing market got back on its feet last year as prices rose, inventories tightened and sales improved. Stimulus efforts from the Federal Reserve are also keeping mortgage rates at historically low levels, which has helped spur demand. That momentum carried into 2013 and data last week showed home resales hit a three-year high in February.

Reporting by Leah Schnurr; editing by W Simon.

See also:
Buying a Home 44% Cheaper Than Renting, Despite Rising Prices
Another Housing Bubble? Recovery Shows Dangerous Signs, Reports Say
3 Reasons Your Home's Value Is Rising

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