Housing Prices on the Rise: Good Signs for Economy

Home owners may be pleased to learn that home prices have accelerated by the most in almost seven years. The S&P/Case Shiller composite index of 20 metropolitan areas has climbed 10.9% year over year. This has beaten the expectation that was set at 10.2%. This showing is the biggest increase since April of 2006.

According to the experts, the housing market has finally turned the corner as a result of historically low mortgage rates, tightening of inventory and easing of foreclosures. Consumer confidence in general has also picked up as a result of the stock market rally and the lower gas prices.

Home prices in Phoenix, for instance, continued to climb, rising 22.5% from a year earlier. San Francisco, in addition, is up 22.2%. Vegas is showing gains of 20.6%. The Case-Shiller report showed, as well, that Los Angeles prices rose 16.6% from a year ago.

As Michael Gapen, an economist at Barclays in New York, said, “Low inventories and gradually improving housing demand have combined to push housing starts higher and support home price appreciation. We see these factors as remaining in place and expect residential investment to add to GDP growth in the coming quarters. We also expect rising real estate wealth to support household balance sheets and underpin consumption, helping the broader economy to offset a substantial fiscal drag in 2013.”