Tag Archives: home prices rise

US Home Prices Post First 12 Month Gain in Two Years

US Home Prices Post First 12 Month Gain in Two Years

U.S. home prices rose in June 2012 from the same month last year (2011), as this is the first “year-over-year” increase since the Summer of 2010. The increase is the latest evidence of a point in the housing market that is clearly showing signs of improvement.

The Standard & Poors / Case-Shiller Home Price index released August 28, 2012 showed a gain of 0.5% from June 2011.

The last time the “year-over-year” index increased was in September 2010, in which much of that 12-month period was used by the government to offer a home-buying tax credit. The report also showed that all 20 cities tracked by the Home Price index rose in June from May, the second consecutive time in which EVERY city posted gains month-over-month; and all but two cities posted stronger gains in June than May. The cities that recorded the largest one month gains were Detroit, Minneapolis, Chicago and Atlanta.

The Standard & Poors / Case-Shiller monthly 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 increases, they say, partly reflect the impact of seasonal buying. The month-to-month prices is not adjusted for factors such as seasonal. However, a measure of national prices rose for the third straight month as home prices jumped nearly 7% in the 2nd quarter compared to the 1st quarter.

The housing market IS making a modest yet steady recovery in part because homes have become more affordable. Mortgage rates have fallen to near record lows, and housing prices are about 1/3 lower than at the well-known peak of the housing bubble in 2006. Those trends have helped lift sales of both new and previously occupied homes. Sales of previously occupied homes increased in July from June, as reported by the National Association of Realtors. Sales have jumped 10% in the past year. Builders are also growing more confident after seeing more traffic from potential buyers. Last month, builders applied for the largest number of building permits in nearly four years.

The housing market however has a long way to go to reach a complete recovery. Some economists have forecasted that sales of previously occupied homes will rise 8% this year to about 4.6M which is well below the 5.5M annual sales pace that is considered to be healthy. Sales have been held back by a low supply of homes on the market and tight credit standards. Many potential buyers are having trouble qualifying for loans or cannot afford larger down payments as being required by the banks. A Federal Reserve report release last month showed that the majority of banks have tightened their mortgage credit standards throughout the summer.

The positive effect of this entire 2nd quarter is that the housing market is steadily improving and is scheduled to contribute to the economic growth of 2012. Modest economic growth and available employment are also encouraging more Americans to purchase homes.