Home prices south of the border rose sharply in early spring amid rising demand and supply constraints, a sign that the lopsided housing-market recovery of the past five years is gaining strength.
The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 5.2% in the 12 months ended in March, slightly less than a 5.3% increase in February. The 10-city index gained 4.7% from a year earlier and the 20-city index gained 5.4% year-over-year. Economists expected a 5.4% increase in the 20-city index.
After years of volatility, home prices have grown at a rate around 5% since early 2015. That bodes well for sellers heading into the peak home-selling season in May and June but could pose challenges for buyers, especially first-timers who may be priced out of the market as supply, particularly among starter homes, remains thin.
The recovering housing market has been a key support for the overall economy in recent years. Private residential construction in the opening months of 2016 grew at the fastest pace and made the biggest contribution to economic growth since the end of 2012. That partially offset a big drag from business investment, which has languished amid a downturn in the energy sector and slow growth abroad.
The housing sector also has contributed to steady job gains, though overall employment levels remain well below their bubble-induced peak.
Since bottoming out in early 2011, payrolls for residential builders and contractors have expanded about 31%, or nearly 608,000 jobs, though still 832,000 jobs below their 2006 high.
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