US house prices climb at fastest rate since 2006

 
Ben Southwood
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HOME prices in the US shot up at the quickest pace seen in almost seven years in November, data revealed yesterday.

The Case-Shiller 20-city composite home price index grew 5.5 per cent in the year to November 2012, according to data from S&P Dow Jones Indices – the biggest yearly price gain since August 2006.

The 10-city index, looking at the biggest 10 metropolitan areas in the US, also saw healthy growth, running at 4.5 per cent over the 12 months to last November.

Omair Sharif at RBS Securities said this new data added to a picture of a solid housing recovery, after the first post-crisis correction fizzled out.

“This is a continuing trend in place for the better part of a year,” Sharif said. “This is another indication that a housing rebound is fairly entrenched at this point.”

The top performer was Phoenix, Arizona, the sixth biggest city in the US, in which home prices soared 22.8 per cent over the year. Prices fell only in New York, by one per cent, while four cities other than Phoenix enjoyed double-figure price growth.

But the Conference Board’s measure of US consumer confidence, also out yesterday, was much gloomier reading. The headline figure collapsed from 66.7 in December to hit 58.6 in January, yet further below the 100 level that corresponds to the average for 2008.

Conference Board director Lynn Franco blamed the payroll tax hike agreed in the fiscal cliff deal for tightening pressure on wallets and therefore clamping down on sentiment.

“The increase in the payroll tax has undoubtedly dampened consumers’ spirits and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock,” Franco said.