Home prices signal recovery may be here
The S&P/Case-Shiller national home price index, which covers more than 80 percent of the housing market in the United States, climbed 6.9 percent in the three months ended June 30 compared to the first three months of 2012.
Making sense of the story
- Two other key indexes covered in the S&P/Case-Shiller report also showed gains. The 20-city index was up 6 percent on the second quarter, and the 10-city index rose 5.8 percent.
- National prices were up 1.2 percent compared with a year earlier, and the 20-city and 10-city indexes also gained year over year. It was the first time all three measures showed positive annual growth rates since the summer of 2010, when generous tax credits for home buyers were in place.
- The steep increase in home prices “feels really good after six years of straight down,” said Mark Zandi, chief economist of Moody’s Analytics.
- He cautioned that the results may overstate the case for the housing recovery a bit. The mix of homes being sold has changed lately, with fewer repossessed homes on the market. Those sell at big discounts to conventionally sold homes and had been propelling prices downward.
- As home values increase, home equity rises, and fewer mortgage borrowers will be underwater, owing more than their homes are worth. That will give them an asset to tap should they run into a tight financial patch.
- An improving housing market will also give homeowners more confidence in the investments they’ve made in their homes.
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