Steady job growth, low mortgage rates and tight inventories helped spur rising home prices in October, and a stronger job market lifted consumer confidence in December, separate reports showed on Tuesday.
The Standard & Poor's/Case-Shiller 20-city home price index rose 5.5 percent in the 12 months ending in October, up from a 5.4 percent pace in September.
Home values have climbed at a roughly 5 percent pace during much of 2015, as strong hiring has bolstered a real estate market still recovering from a housing crash that led to a recession eight years ago.
"The U.S. housing market as a whole made great progress in 2015, as the big and occasionally volatile bounce off the bottom we experienced from 2012 through 2014 gave way to a more stable and sustainable environment," said Svenja Gudell, chief economist at the real estate firm Zillow.
Rising demand, however, has not been met with an increase in sales listings, causing prices to rise much faster than inflation or wages this year. This could limit the number of first-time buyers coming into the market next year. Still, many buyers are also benefiting from 30-year, fixed-rate mortgages averaging less than 4 percent, making it cheaper to borrow for a home. Mortgage rates have historically been closer to 6 percent.
But the gains in home prices have been uneven. San Francisco, Denver and Portland, Ore., led with reported increases of 10.9 percent over the last year. Prices in Chicago and Washington, D.C., rose less than 2 percent. The 20-city index remains 11.5 percent below its peak in July 2006, with metro areas such as Cleveland, Detroit, Miami, Minneapolis and Tampa still significantly below their pre-recession highs.
The Case-Shiller index covers roughly half of the homes in the United States. The index measures prices compared with those in January 2000 and creates a three-month moving average.
In another report, the Conference Board's consumer confidence index rose to 96.5 this month from November's revised 92.6.
Americans were more optimistic about current conditions and about the future.
"As 2015 draws to a close, consumers' assessment of the current state of the economy remains positive, particularly their assessment of the job market," said Lynn Franco, the group's director of economic indicators.
More than two-thirds of consumers said they expected interest rates to rise over the next year, the highest share since August 2013. On Dec. 16, the Federal Reserve raised the short-term interest rate it controls for the first time since 2006.
Hiring has been healthy in 2015. Employers added an average of 210,000 jobs a month through November. Unemployment has stayed at a seven-year low of 5 percent for two straight months. Confidence had dipped unexpectedly in November and this month remained below readings around 100 from August through October.
"U.S. consumers regained a bit of their swagger in December," Jennifer Lee, a senior economist at BMO Capital Markets, wrote in a research report. She noted that confidence rebounded the most among young households — those headed by someone younger than 35 — potentially a sign that more first-time home buyers were ready to enter the housing market.
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