House prices are still rising as lean inventory continues

Home prices in 20 U.S. cities maintained a steady pace of increases in October while a gauge of nationwide property values rose by the most since mid-2014, according to S&P CoreLogic Case-Shiller data released Tuesday.

The 20-city property values index rose 5.1 percent from October 2015 (forecast was 5 percent) after a 5 percent gain in the year through September.

The national home-price gauge increased 5.6 percent from 12 months earlier, the biggest gain since July 2014, to a record 185.06; the measure first exceeded the 2006 pre-recession peak in September.

On a monthly basis, the seasonally adjusted 20-city index increased 0.6 percent (forecast was 0.5 percent) from the prior month after a 0.5 percent gain

Lean housing inventory has continued to put upward pressure on home values as steady hiring has lifted demand, resulting in two years of steady gains in property prices of around 5 percent.

A postelection spike in borrowing costs could reduce housing affordability until home-price appreciation slows.

The prospects of faster income growth in a tight job market may also make higher interest rates easier to manage.

"Home prices and the economy are both enjoying robust numbers," David Blitzer, chairman of the S&P index committee, said in a statement. "However, mortgage interest rates rose in November and are expected to rise further as home prices continue to outpace gains in wages and personal income.

"Affordability measures based on median incomes, home prices and mortgage rates show declines of 20-30 percent since home prices bottomed in 2012. With the current high consumer confidence numbers and low unemployment rate, affordability trends do not suggest an immediate reversal in home price trends," he said. "Nevertheless, home prices cannot rise faster than incomes and inflation indefinitely."

All 20 cities in the index showed a year-over-year gain, led by a 10.7 percent advance in Seattle and a 10.3 percent increase in Portland, Ore.

New York had the smallest 12-month advance, at 1.7 percent.

After seasonal adjustment, Atlanta had the biggest month-over-month growth, at 1.4 percent, followed by Cleveland at 1.3 percent.