With the release of the latest home price index from S&P/Case-Shiller, all signs point towards a speedy housing recovery. While unemployment rates and lackluster consumer confidence continue to be a lag on the U.S. economy, the housing sector is a definite bright spot, spurring economic growth.
For the fourth consecutive month, prices for single-family houses have risen across 20 American cities. Average home prices rose 1.5 percent in July, surpassing economists’ predictions by .2 percent. The increase is also over 6 percent higher than the index recorded in March of this year.
This upward trend adds to the growing consensus that the housing market has finally bottomed out and is on the mend. Last spring, home values were depreciating nationally, but have since rebounded, though they remain 30 percent below their value in 2006.
“Stronger housing numbers are a positive factor for other measures including consumer confidence,” said David Blitzer, chairman of the S&P index committee.
“The news on home prices in this report confirms recent good news about housing. Single family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down, and foreclosure activity is slowing. All in all, we are more optimistic about housing. Upbeat trends continue. For the third time in a row, all 20 cities and both Composites had monthly gains. Stronger housing numbers are a positive factor for other measures including consumer confidence,” said Blitzer in a statement.
Ivy Zelman of research firm Zelman & Associates echoed Blitzer’s statement. “Housing is no longer a negative. It is turning positive and we see the data reflecting that,” Zelman said.
Comparing year-over-year prices the index shows that prices in 16 of the 20 cities surveyed have improved since July 2011. The four cities still in the red compared to last year include, Chicago, Las Vegas, New York, and Atlanta. Atlanta has by far the weakest market, with home values nearly 10 percent lower than they were in 2011. Moreover, in Atlanta, Detroit, and New York, a home costs less than it did in January 2000.
So even with signs of a strong recovery, there remains a lot of ground to cover. According to housingviews.com, the S&P’s new blog that offers commentary and analysis on housing topics, it will take much time to get back to home price levels seen in the early 2000s.
Fortunately, a boom in home construction has taken the industry by storm, reaching the highest levels seen in two years.