San Diego County home prices in March increased 7.7 percent from a year ago, outpacing most of the nation, a closely-watched housing index reported.

Riding a wave of rising prices across the nation, the S&P CoreLogic Case-Shiller Indices showed that nationally, home prices had increased 6.5 percent over 12 months. Seattle had the biggest increase of 13 percent in the 20-city index.

Prices were up across California. San Francisco prices went up 11.3 percent in the same time period and Los Angeles prices increased 8.1 percent.

Cheryl Young, a senior economist, said prices are going up because of low unemployment, a strong economy and lack of homes for sale.

“Generally speaking, in the housing bubble that occurred 10 to 13 years ago, a lot of that was really driven by things that were speculative rather than core fundamentals,” she said. “The economy is doing well right now, and those are the sort of fundamentals that are driving demand.”

Young said first-time homebuyers will struggle as prices increase, with the only real relief possibly coming from increased home inventory. She said rising mortgage interest rates could slow the pace of price increases for homes, but that wouldn’t necessarily help buyers afford them.

The indices evaluate home prices by more than just price, tracking repeat sales of identical single-family houses as they turn over through the years. Prices are adjusted for seasonal swings. The San Diego median home price in March for a resale single-family home was $608,750, said CoreLogic.

David Blitzer, managing director of the index, wrote that rising prices are more than just inflation, proven by Chicago — where home prices went up the slowest at 2.8 percent, which still outpaced inflation.

“Until inventories increase faster than sales,” he wrote, “or the economy slows significantly, home prices are likely to continue rising.”

For homeowners, the increases mean a major return on investment. The National Association of Realtors said Tuesday that the aggregate nationwide gain in housing wealth over the year was $1.8 trillion.

Still, the difficulty for first-time buyers continues to be a major concern for local business leaders. Sean Karafin, a vice president at the San Diego Regional Chamber of Commerce, said the region would lose talented workers to other cities because of a lack of housing.

“The housing shortage is hurting working families who often face long commutes, tough financial decisions,” he said, “and a lack of housing options that force them to consider moving elsewhere.”

There were 3,475 single-family homes listed for sale in March, said the Greater San Diego Association of Realtors, down from 5,323 in March 2012 around the time prices started increasing.

Source: SDuniontribune by Phillip Molnar