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U.S. home price gains slow in October, but yearly gain increases: S&P

A single family home is shown for sale in Encinitas, California May 22, 2013. REUTERS/Mike Blake
A single family home is shown for sale in Encinitas, California May 22, 2013. REUTERS/Mike Blake

NEW YORK (Reuters) - U.S. single-family home prices rose less than expected in October but posted their strongest annualized gain in more than seven years, a closely watched survey said on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.2 percent in October on a non-seasonally adjusted basis, below economists' expectation of a 0.7 percent gain. Prices rose 0.7 percent in September.

On a seasonally-adjusted basis, prices were up 1 percent.

Compared to a year earlier, prices were up 13.6 percent, beating expectations of 13 percent and marking the strongest gain since February 2006, when the increase was 13.8 percent.

Housing prices have been rising since early 2012, and a rebound in the sector has helped the U.S. recovery gain steam.

But the more subdued monthly gains "show we are living on borrowed time and the boom is fading," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.

"The key economic question facing housing is the Fed's future course to scale back quantitative easing and how this will affect mortgage rates," he said.

The Fed recently said it would start trimming its asset purchases by $10 billion a month in 2014. That could push up bond yields and mortgage rates, slowing the housing rebound.

Prices in all 20 cities rose on a non-seasonally adjusted yearly basis, led by a 27.1 percent gain in Las Vegas and followed by a 24.6 percent increase in San Francisco.

(Reporting By Steven C. Johnson; Editing by Chizu Nomiyama)

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