Property values rose more than expected in October, offering holiday cheer to homeowners as lingering fiscal-cliff negotiations threaten to replace champagne with tax increases when Americans ring in the new year next week.
The S&P/Case-Shiller index of property values in 20 cities increased by 4.3 percent from October 2011, the biggest 12-month advance since May 2010, the group said today in New York. The median forecast of 30 economists in a Bloomberg survey projected a 4 percent gain.
Housing data has continued to offer a bright spot in an otherwise tepid economic recovery. Improving home prices and sales, record-low borrowing costs, and trimming foreclosure inventories have allowed residential homebuilding to add to U.S. growth for the first time in seven years.
“The housing market is definitely starting to recover,” said Ryan Wang, an economist with HSBC Securities USA Inc. in New York, who’s the second-best forecaster of the S&P/Case-Shiller index over the past two years, according to data compiled by Bloomberg.
Still, faltering budget negotiations have spoiled the eggnog. President Barack Obama is scheduled to return to the White House tomorrow from his annual family Christmas retreat to Hawaii to resume talks with lawmakers, and businesses are tempering 2013 expectations against the possibility that a budget deal won’t be reached by the time the Times Square ball drops at midnight on Dec. 31.
Holiday shopping, too, showed Scrooge-like results as retail sales grew at less than half of last year’s pace from Oct. 28 through Dec. 24. Purchases rose by 0.7 percent compared with 2 percent in the same period last year, according to a report yesterday from MasterCard Advisors SpendingPulse, which tracks total U.S. sales at stores and online via all payment forms.