Los Angeles and U.S. home prices are showing renewed strength, even amid concerns over the general health of the national economy.
Prices nationally climbed 5.43% in December compared with a year earlier — the fastest pace since July 2014, according to the S&P/Case-Shiller index released Tuesday. In Los Angeles and Orange counties, prices surged 6.17%, a slight pick up from the prior two months and ahead of the mid-5% range seen in the beginning of 2015.
The acceleration bucks the prediction of many economists for weaker home price growth.
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The robust figures also suggest that the market is withstanding jitters about the direction of the U.S. economy, which began with wild stock market swings in August because of the devaluation of the yuan and concerns about China's slowing growth.
But economists said low mortgage rates, job growth at home and few houses for sale are driving up prices in the U.S.
"The housing market recovery continues to charge ahead despite concern over global economic conditions," said Ralph B. McLaughlin, chief economist with real estate website Trulia.
A major factor in the price increases is the lack of homes for sale.
In the Los Angeles region, there was a 4.8-month supply of homes for sale in January, meaning that if homes sold at their current rate there would be none left after that time frame. That compares with a 5.5-month supply a year earlier and a six-month supply economists consider a healthy balance, according to the California Assn. of Realtors.
Homes also sold faster than a year earlier.
"People are willing to bid up because there are no other options," said Aaron Terrazas, a senior economist with real estate firm Zillow.
Also Tuesday, the National Assn. of Realtors released figures showing that sales of previously owned homes rose to the highest level in six months, another sign of the market's overall strength.
Price increases could still weaken, however — and economists generally expect them to do so as buyers increasingly find it difficult to afford a home. The stock market also got off to a brutal start this year, and sales during January aren't reflected in the most recent Case-Shiller numbers.
The Case-Shiller index lags other price indicators, but is widely considered the most reliable read on home values. It compares the latest sales of detached houses with previous sales and accounts for factors such as remodeling that might affect a sale price over time.
David M. Blitzer, managing director of the Index Committee at S&P Dow Jones Indices, said there are some signs of weakening growth. Seven metro areas tracked by Case-Shiller, for example, saw smaller price increases in December than they did a month before.
Los Angeles and Orange counties, however, were not among those areas.
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