South Florida home prices were up 8.5 percent in October from the same time last year, nearly double the increase seen nationally and another indicator of a recovering real estate market.
The surge in prices in Palm Beach, Broward and Miami-Dade counties puts the region in fifth place for the highest annual gain on the Standard & Poor's/Case-Shiller index, which was released Tuesday.
A small drop in prices -- less than a percentage point -- was seen in October from September, ending a 10-month trend of rising South Florida values. But index experts said price dips are typical during the fall and not an indicator of waning momentum.
Overall, the 20 major metropolitan areas measured by Case-Shiller showed a price increase of 4.3 percent in October from last year. It was the biggest annual gain since May 2010.
"Looking over this report, and considering other data on housing starts and sales, it is clear that the housing recovery is gathering strength," said David Blitzer, chairman of the index committee.
Bill Richardson, district sales manager at The Keyes Co. in Boca Raton and a past president of the Realtors Association of the Palm Beaches, attributes the price gains to a shrinking inventory of homes in South Florida.
The inventory of Palm Beach County single-family homes for sale in November was 4.7 months, a 54 percent decrease from the same time last year. The median sales price in Palm Beach County last month was $219,500, a nearly 20 percent increase from the previous year, according to the association.
"It's supply and demand," Richardson said. "I've been doing this for 25 to 30 years, and I've never seen inventory this low."
Still, South Florida's prices in October were 46 percent below the area's peak market in December 2006.
Prices nationwide have recovered to about the same level as in the fall of 2003, according to the Case-Shiller index. They remain about 30 percent below the peak reached nationally in the summer of 2006.
"One indication of the rebound is the gains from the bottom," Blitzer said.
According to Wednesday's report, prices rose in October from a year ago in 18 of 20 cities. Phoenix led all cities with a 21.7 percent gain, followed by Detroit, where prices increased 10 percent. Prices declined in Chicago and New York.
Tampa saw a 5.9 percent increase from last year, but dipped 0.5 percent from September.
The Case-Shiller index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The October figures are the latest available.
Automatic tax increases and spending cuts that are set to take effect next week could drag down growth. The White House and Congress have so far failed to reach agreement on a way to avoid the "fiscal cliff." President Barack Obama and congressional lawmakers will return to Washington today to resume talks.
Richardson predicts higher sales prices will continue in 2013 in South Florida, but they may not gain as much ground as this year.
An increase in short sales or sales of bank-owned homes, which are typically priced cheaper than a traditional sale, could dampen prices.
"I think 2013 is going to be the year of the short sale," Richardson said. "You'll see price appreciation continue. It may not be 8.5 percent, but it will be going in the right direction."
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