Experts have been saying for some time now that the housing market is on the road to recovery. However, they are still holding their breath and looking for new indicators that they are right. Since the recovery seems to be slow, not everyone is convinced that it is actually happening. The latest numbers on home prices strengthen the belief that we truly are in recovery mode.
Housing Prices Increase
Housing prices jumped in July, up 3.8 percent for the previous 12 months; the biggest gain in 6 years. The prices also increased from June to July by 1.3 percent, the fifth month on month increase in a row.
The S&P index also posted positive numbers with the first annual increase in two years. The fact that multiple indicators are saying the same thing is a good sign. Housing prices have risen 9.6 percent since February, the month when they were at their lowest since the recession.
What This Means
Prices only rise when demand is up, so this is a good indicator that more people are buying homes now than in the past few years. This adds to the information provided by other recent reports which show that sales of new and previously owned homes are up. Mortgage rates are also at their lowest in nearly six decades.
And while housing prices rise in the spring and summer, a time when more people are interested in buying a home, and drop in the fall, the usual drop is nowhere near the 9.6 percent increase that was seen this year.
Don’t Get Too Excited
While states like Utah, Idaho, Colorado, Arizona, and South Dakota have seen the biggest gains, not all states have enjoyed positive numbers. For instance, Delaware prices have dropped by 4.8 percent in the last 12 months. Alabama also saw a drop of 4.6 percent for the same period. While the overall numbers are improving, some areas are still struggling and may not have hit the bottom yet.
Prices are still 27 percent below where they were in April 2006 when we were at the peak of the housing market. However, the good news is that out of the 100 large cities that were tracked, only 23 had declines in July. 27 cities had declines in June; a small improvement, but headed in the right direction.
While the numbers in the last few months have looked really positive overall and some dramatic increases have been seen, experts don’t expect those numbers to be as impressive in the coming months. The economy and people’s salaries are not growing fast enough for these types of numbers to continue.
The fact that we’re entering the low season for housing means that we can expect these numbers to decline in the next few months. When they do start moving upward again, experts predict a slower pace.