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Home prices rise 5.5% in Sept: S&P/Case-Shiller

A sold sign is posted in front of a home for sale on May 27, 2014 in San Francisco, Calif.
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A sold sign is posted in front of a home for sale on May 27, 2014 in San Francisco, Calif.

Home prices in 20 U.S. cities rose more than expected in September, according to the latest S&P/Case Shiller Home Price Index.

The 20-city composite rose 5.5 percent year over year in September, compared with consensus estimates for a 5.2 percent rise.

The S&P Case Shiller U.S. National Home Price Index, which measures all nine U.S. census divisions, was up 4.9 percent from the same time last year, ticking up at a slightly faster pace than August's 4.6 percent increase.

San Francisco saw home prices rise at the fastest pace, up 11.2 percent on the year, followed by Denver and Portland, Oregon, which turned in gains of more than 10 percent.

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The latest read is a sign that housing continues to show strength as home prices rise at more than double the rate of inflation, said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.

"The general economy appeared to slow slightly earlier in the fall, but is now showing renewed strength," he said in a statement.

Though most analysts now expect the Federal Reserve to raise interest rates at its December meeting, that prospect is not likely to push 30-year conventional mortgage rates much above 4 percent, Blitzer said.

But Svenja Gudell, chief economist at real estate database Zillow, said the threat of rising rates could put a damper on housing affordability — particularly in hot coastal markets — at a time when buyers are finding it more difficult to afford down payments.

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"Rising home values and rents alike can make saving a suitable down payment very difficult, and continued shortages in for-sale homes means even qualified buyers with decent savings are often left out in the cold," she said in a statement.