U.S. home prices jump in September by most in more than a year

U.S. home prices rose in September from a year earlier at the fastest pace in 13 months as a lack of houses for sale has forced buyers to bid up available properties.

The Standard & Poor’s/Case-Shiller 20-city home price index, released Tuesday, increased 5.5% in September compared with a year ago, the largest annual gain since August 2014. In Los Angeles and Orange counties, home prices rose 6.4% compared to a year earlier.

Steady job gains and low mortgage rates have propelled a solid rebound in home sales, which are on track to reach the highest level since 2007. The unemployment rate fell to 5% in October as employers added the most jobs since December. Borrowing costs have ticked up but remain below 4%, a low level historically.

San Francisco reported the largest annual home price increase, at 11.2%, followed by Denver at 10.9%. Portland had the third largest gain, at 10.1%. All 20 cities surveyed reported higher prices than a year earlier.

On a monthly basis, prices rose 0.2% in September from August. Prices rose in seventeen of 20 cities from the previous month. They fell in Chicago, Cleveland and Washington, D.C.

Home prices are rising at more than double the pace of inflation and much faster than wages, pricing many Americans out of the housing market. That has also pushed up rents as Americans increasingly stay in apartments.

Still, home prices are rising at a much slower pace than the double-digit gains seen in most of 2013. David Blitzer, chairman of the S&P Dow Jones Index Committee, said that the higher prices aren’t out of line with rising rents. That’s a change from the housing bubble, when home prices soared much higher than rental costs.

The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The September figures are the latest available.