Home Prices Continue to Rise — But Will the Market Rebound Continue?

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Spring is traditionally a strong season for home sales, and despite continued uncertainty in the economy, this spring was no exception, with housing prices up around the country, according to the S&P/Case-Shiller Index. June housing price levels rose in 18 of the 20 major metro areas followed by the index and are now up 6% from the lows of March 2012. But keep in mind that the market, as anyone who is involved in it knows, still has a long way to battle back, with current levels 31% off the real estate peak of summer 2006.

The Case-Shiller index is known for being variable, and the May seasonally adjusted increase appears to have been revised upward a smidge, to a pop of 1.0%. The seasonally adjusted composite increase of 0.9% in June, and the jump of 2.2% in the second quarter versus the first, are also positive news.

Whether this fire will continue given the last couple of weeks of interest rate increases, as mortgage rates have been jumping off their record lows, remains to be seen. For now, the year-over-year strength in Phoenix (up 13.9%), Minneapolis (up 5.7%), Miami (up 4.4%), Denver (up 4.0%), and San Francisco (up 3.0%) appears broad-based.

(MORE: Home Prices Rise Across the Board)

The market in Atlanta, where prices had been plummeting, is up 2.3% in June after posting a rise of 1.8% in May. Real estate in the city is still weak compared to last year (down 12.1%), but it appears that the free-fall has been arrested.

A couple of major metros seem to be down versus last year — New York has dropped 2.1% and Los Angeles is down 0.6% — but since S&P/Case-Shiller tracks single-family homes, that’s likely a data bias because the hotness of those cities’ apartment markets isn’t factored in. A recent report by appraiser and data provider Miller Samuel, for instance, notes that Brooklyn condominium prices were up 24.6% in the second quarter versus a year ago.

National price indexes for real estate other than S&P Case-Shiller have also looked quite positive. Last week, the National Association of Realtors reported its fifth straight monthly increase in the national median price, as that data point hit $187,300 in July, up 9.4% from the previous year. The Federal Housing Price Index, which throughout the housing crash has been measuring a less-bleak picture than Case-Shiller, was up 0.7% in June over May, and up 3.0% in the second quarter from a year ago.

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Going forward, the variable in the market is interest rates. The Associated Press reports that the 30-year mortgage rate is at 3.66%, still amazingly low in historical terms, but marking four consecutive weeks of increases from the record low 3.49%. Ditto the 15-year mortgage rate, which is up from its record low of 2.8% to 2.89%. The Federal Reserve, which exerts control over interest rates through its activities in the market, has stated a goal of keeping long-term interest lows. As Reuters noted, investors will be eagerly watching Federal Reserve Chairman Ben Bernanke’s Friday speech at Jackson Hole to make sure that policy is being pursued.

7 comments
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weitan
weitan

Price increases should continue because of the cut-off in housing construction the past several years.   Smart money has been investing in real estate funds because while the US population continues to grow, housing supply is not keeping up.  Of course, the job situation needs to improve to make it sustainable.

Here in Manhattan, prices are increasing steadily as well driven by low rates and foreign interest.

Weimin

www.castle-avenue.com

weitan
weitan

Price increases should continue given the cut off in housing construction the past several years.  The US's population continues to grow and housing inventory is behind the population growth.  That's why smart money has been investing in real estate the past 2 years.

On a more local level, here in Manhattan prices are going up steadily driven by low rates and foreign interest.

Weimin

www.castle-avenue.com

weitan
weitan

The price increase should continue given the cut off in housing construction the past several years.  The US's population continues to grow hence the need for housing and that's why smart money has been buying into real estate funds starting two years ago.  

On a local level, Manhattan New York is experiencing a steady increase driven by low rates and foreign interest.  

Weimin

www.castle-avenue.com

Firozali A.Mulla
Firozali A.Mulla

Why look at China when we have our feet wet? I thank you Firozali A.Mulla DBA

Firozali A.Mulla
Firozali A.Mulla

This

may be the only good news but that does not mean we can rest and look at the

economy as settled Oil prices fell on Monday after weaker-than-expected

manufacturing data from China intensified concerns about the global economy. Benchmark oil for October

delivery was down 16 cents at $96.31 a barrel at midday Bangkok time in

electronic trading on the New York Mercantile Exchange. The contract rose $1.85

to finish at $96.47 per barrel Friday in New York.  European shares crept higher on Monday after weak factory data

highlighted the poor health of the world economy, keeping alive talk of fresh stimulusfrom major central banks. However, with US investors out

for the Labour Day holiday, markets were likely to trade in a limited range. Expectations that central banks would take steps to boost growth increased after

two Chinese surveys showed factory activity in world's second largest economy slowing more than

expected in August.  I

thank you Firozali A.Mulla DBA

Mordechai Kushner
Mordechai Kushner

So much ink spilled on the analysis of home sale price trends, with nary consideration given to analyzing the fundamental supply and demand drivers. Look at trends in population growth, household formation, new construction, and the like, and then you'll get some real insight into where the housing market is headed. Study the driver, not the car!

Ahra Ah
Ahra Ah

soon we´ll be able to trade the housing index futures and again soon the index will be subjected to another bubble just to prop up the false economy.