US homes prices exceeded economists' expectations in November 2014, signalling that job growth is boosting housing demand across the country.
Values rose by 0.8% on a seasonally adjusted basis from October, according to the Federal Housing Finance Agency in a report from Washington. Analysts had expected a more modest increase of 0.3% but positive employment indicators coming from the US pushed prices higher.
The US is currently enjoying the lowest unemployment rate since June 2008, as an additional 2.95 million Americans found work in 2014, the most in 15 years.
Millan Mulraine, deputy head of US research and strategy at TD Securities in New York said: "The labour market activity will ignite increasing demand and loosen tight credit constraints. The labour market will always be the answer to housing woes".
Economic growth in the US is expected to accelerate this year, improving prospects for wage increases and boosting household formation. Fannie Mae's Economic & Strategic Research Group raised its projection for economic growth this year to 3.1% from 2.7% in its prior forecast.
Affordability is improving
The pace of home price increases slowed in 2014. In November 2013, values were up 7.5% from a year earlier.
"The fact that you see house price moderation is good news for the housing market," Thomas Costerg an economist at Standard Chartered Bank in New York said. "Affordability is improving," he added.
Multifamily residential apartments are predicted as the main growth market in the US, based upon gains achieved in the sector for the past few years. The multifamily market has had strong demand in recent years and is set to remain that way in 2015, despite certain headwinds that could affect the industry.
David Crowe, chief economist at the National Association of Home Builders (NAHB) said: "The multifamily industry is strong and producing more units than in previous cycles. The industry has shown dramatic increases in construction since the recession but the level of increase will moderate as we approach equilibrium".
With employment levels at an all-time high, prosperity is set to improve throughout America creating a rising and consistent demand for suitable housing, particularly in the multifamily sector.