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Home prices show 12-month gain
A gauge of national home prices rose in June compared with the same month last year, according to the Standard & Poor’s/Case Shiller index, reports the Charlotte Observer. The year-over-year increase was the first since September 2010, a year when housing benefited temporarily from a federal home-buying tax credit.
Charlotte home prices rose in June for the fourth straight month, a continuing good sign for the local housing market index indicates that housing prices in Charlotte rose 1 percent in June from May and were up 0.8 percent over June 2011. “Prior to these months, we’ve not seen positive price changes since March 2008,” said Bill Saint, president and chief executive officer of Classica Homes, in an email. “This is remarkable news.”
The report also noted that all 20 major metro areas tracked by the S&P/Case Shiller index posted gains in June from May. That’s the second straight month in which prices rose in every city measured.
“I think we have turned the corner on prices,” said David Blitzer, chairman of the S&P’s index committee. “It looks very good.” A decline in foreclosures and the lowest mortgage rates in decades have helped some of the cities hardest hit by the housing bust.
The steadiness of the price increases is helping bolster a nascent housing recovery that began earlier this year. Last week, the National Association of Realtors said sales of previously occupied homes jumped 10 percent in July compared with the same month last year.
Builder confidence rose this month to its highest level since the housing market went bust five years ago. And the average rate on a 30-year fixed mortgage has been below 4 percent all year. As prices rise, more Americans will likely be inclined to put their houses up for sale. That could further energize the market, which has been hampered by a low supply of available homes.
“The best news on the housing front is that prices have turned,” said Patrick Newport, U.S. economist at IHS Global Insight. Newport said rising prices could help many Americans who owe more on their mortgages than their homes are worth now. It could also boost consumer spending if people feel wealthier. Consumer spending accounts for about 70 percent of economic activity.
Even with the gains, prices have a long way to go to recover from their plunge during and after the housing bubble burst in late 2006 and early 2007. Nationally, prices in June were 31.6 percent below the peak hit in April 2006, based on the S&P/Case Shiller index.
The S&P/Case-Shiller index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The June figures are the latest available. Some economists expect sales of previously occupied homes nationally to rise 8 percent this year to about 4.6 million. That’s still well below the 5.5 million annual sales pace that is considered healthy.
Many would-be buyers are having trouble qualifying for loans. Or they can’t afford larger down payments being required by banks. A Federal Reserve report last month showed that many banks tightened their mortgage credit standards this summer. Still, the housing market is steadily improving and is poised to contribute to economic growth this year. Modest growth and job gains are encouraging more Americans to buy homes. Read More.