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U.S. home price growth accelerates in March

House price growth rose to its highest level in more than 15 years in March as strong demand continued to outpace housing supply.

The S & P Core Logic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the country, rose 13.2% in the year ended in March from an annual rate of 12% last month. March recorded the highest annual price increase since December 2005.

Prices have risen sharply in recent months due to strong demand for home purchases from ultra-low interest rate mortgages and a shortage of homes for sale. According to the National Association of Real Estate Agents, there were 1.07 million homes on the market at the end of March, down 28.2% year-on-year.

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Although there are early signs that home sales are slowing, economists expect supply-demand imbalances to continue to push prices up. Soaring home prices and inventory restrictions prevent first-time buyers and those with limited budgets from taking ownership of the home.

New home sales fell 5.9% from March to April to a seasonally adjusted annual rate of 863,000, according to the Department of Commerce.

The Case-Shiller 10 Cities Index increased 12.8% over the year ended in March, compared to a 11.7% increase in February. The 20-city index rose 13.3% after rising 12% annually in February. Price increases accelerated in all 20 cities.

The US mortgage market involves several key players who play an important role in the process. Here’s what investors should understand and the risks they take when investing in the industry: The WSJ’s Telis Demos explains.Photo: Getty Images / Martin Barrow

Selma Hepp, Deputy Chief Economist at CoreLogic, said:

Economists surveyed by The Wall Street Journal predicted that the index for 20 cities would increase by 12.4%.

Phoenix showed the fastest rise in home prices in the country for 22 consecutive months, at 20%, followed by San Diego at 19.1%.

Another measure of home price increases by the Federal Housing Finance Agency, released Tuesday, found that March home prices rose 13.9% year-on-year. This is a record of data dating back to 1991.

Americans on the move

More WSJ coverage on rising housing demand, selected by the editor.

Write to Nicole Friedman (nicole.friedman@wsj.com)

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U.S. home price growth accelerates in March

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