(Bloomberg) -- Home prices in 20 U.S. cities rose at a fasterpace than projected in the year through March, reflecting a limitednumber of available properties on the market.

The S&P/Case-Shiller index of property values increased 5percent from March 2014 for a second month, the group said Tuesdayin New York. The median estimate of 25 economists surveyed byBloomberg called for a 4.6 percent year-over-year advance.Nationally, prices rose 4.1 percent from March 2014.

Higher home prices along with lean inventory and limited incomegrowth have tempered the recovery in residential real estate. Moreconstruction, particularly of cheaper properties, would help boostsupply and bring purchases within reach of more Americans lookingto take advantage of low borrowing costs.

“We’ve got an increase in demand at the same time supply hasbeen pretty modest -- that’s pushing prices up,” David Berson,chief economist at Nationwide Insurance in Columbus,Ohio, said before the report. “I think house-price gains willmoderate, because we’ll start to see more people put houses on themarket and more builders building more.”

Economists’ estimates in the Bloomberg survey ranged from gainsof 4.3 percent to 5.4 percent. The S&P/Case-Shiller index isbased on a three-month average, which means the March figure alsowas influenced by transactions in February and January.

Home prices in the 20-city index adjusted for seasonalvariations increased 1 percent in March from the prior month, inline with the Bloomberg survey median of 0.9 percent.

San Francisco, Denver

All 20 cities in the index showed a year-over-year gain, led bya 10.3 percent increase in San Francisco and a 10 percent pickup inDenver. Prices climbed at the slowest pace, 1 percent, in bothWashington and Cleveland.

The price increases accelerated in 10 cities in March from thesame time in 2014. The pace of gains slowed in the rest.

The year-over-year gauge, based on records dating back to 2001,provides better indications of trends in prices, the group hassaid. The panel includes Karl Case and Robert Shiller, theeconomists who created the index.

“Home prices are currently rising more quickly than either percapita personal income or wages, narrowing the pool of futurehomebuyers,” David Blitzer, chairman of the S&P indexcommittee, said in a statement. “All of this suggests that somefuture moderation in home price gains is likely.”

Measured against a month earlier, property prices rose in all 20cities in March, according to the seasonally adjusted data. Theyjumped 2.6 percent in Detroit, while Cleveland showed the smallestgain at 0.1 percent.

Housing Supply

A scant supply of homes for sale has helped keep property valuesrising as buyers bid up prices. Last month, it took about 39 daysto sell a house once it came on the market, according to data fromthe National Association of Realtors. That’s the shortest spansince the middle of 2013, said Lawrence Yun, the group’s chiefeconomist.

“We don’t want prices to get too far ahead of income, but thatis what’s happening because of lack of supply,” Yun said during anews conference as March sales data were released last week.

Contract closings on previously owned properties unexpectedlydropped 3.3 percent to a 5.04 million annualized rate in Aprilafter a 5.21 million pace that was the strongest in almost twoyears, the NAR figures showed.

While housing has shown uneven growth so far in 2015, the datahome-improvement retailer Lowe’s Cos. Inc. remains upbeat.

‘Steady Recovery’

“We continue to see steady recovery within the housing market,”Chief Executive Officer Robert Niblock said on a May 20 earningscall. “Key drivers of home-improvement industry growth -- job andincome growth, home buying and home price appreciation -- remainedaligned.”

A stronger pickup in wages would make a home-buying decisioneasier for more Americans.

While the employment cost index advanced in the first quarter atits fastest pace since the end of 2008, other measures show moremodest gains. Average hourly earnings increased 2.2 percent inApril from a year earlier, compared with a 2 percent average duringthe expansion that began in June 2009.

Borrowing costs have remained attractive for those able to getfinancing. The average rate on a 30-year, fixed mortgage was 3.84percent in the week ended May 21, close to the level at the startof 2015 and below last year’s high of 4.53 percent in January 2014,according to data from Freddie Mac in McLean, Virginia.

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