WASHINGTON — A measure of U.S. home prices rose 6.3 percent in October compared with a year earlier, the largest yearly gain since July 2006. The increase adds to signs of a comeback in the once-battered housing market.
Core Logic also said Tuesday that prices declined 0.2 percent in October from September, the second straight month-to-month drop after six consecutive increases. The monthly figures are not seasonally adjusted. The real estate data provider says the decline reflects the end of the summer home-buying season.
Steady price increases are helping fuel a housing recovery by encouraging more homeowners to sell their homes and enticing would-be buyers to purchase homes before prices rise further.
Home values are rising in more states and cities, according to the report. Prices increased in 45 states in October, up from 43 the previous month. The biggest increases were in Arizona, where prices rose 21.3 percent, and in Hawaii, where they were up 13.2 percent.
The five states where prices declined were Illinois, Delaware, Rhode Island, New Jersey and Alabama.
In 100 large metro areas, only 17 reported price declines. That's an improvement over September, when 21 reported declines.
Mortgage rates are near record lows, while rents in many cities are rising. That makes home buying more affordable and the preferred option, pushing up demand.
At the same time, the number of available homes is at the lowest level in 10 years, according to the National Association of Realtors. The combination of low inventory and rising demand also pushes up prices.
Last week, an index measuring the number of Americans who signed contracts to buy homes in October jumped to the highest level in almost six years. That suggests sales of previously occupied homes will rise in the coming months.
Builders, meanwhile, are more optimistic that the recovery will endure. They broke ground on new homes and apartments at the fastest pace in more than four years in October.