National home prices have reached their highest since the housing bubble in 2007, rising 8.1 percent in January, a tell-tale sign of continued recovery.
According to data collected by the S&P Case-Shiller index, which tracks the 20 largest markets in the nation, the biggest year-over-year gain in house prices has occurred since 2006, marking the highest increase since the housing bubble burst.
The Case-Shiller report shows the recovery in home prices is more wide-spread than it has been in several years. All 20 markets posted a year-over-year gain with the pace of increase picking up in every market with the exception of Detroit. Those markets that were hurt most severely by the housing bubble burst have seen some of the largest gains; a 23 percent rise in Phoenix and more than 10% rise in San Francisco, Las Vegas, Detroit, Atlanta, Minneapolis, Los Angelos and Miami, all markets that were hit hard by foreclosures.
A separate government report released earlier this week indicates that new homes sold at a 411,000 rate in February, a rate down from the January sales pace, but still up 12 percent from last year’s levels. As it stands, the average price of a new home sold in February was $246,800, up 3% from both January of this year and last year.
U.S. economists speculate that bad weather that struck nationwide in February may be responsible for the slowdown in home sales, and suggest that the market for new-home sales should remain strong throughout the year. Forecasts for the second half of 2013 are for even stronger sales.
Home prices have been affected positively by a number of things in recent months, including tight inventory of homes available for sale, near record-low mortgage rates and a drop in homes in foreclosure. Moreover, a decline in unemployment is helping boost the recovery.
Rising home prices are also good for reducing those who owe more on their home than what its worth; those who previously found themselves in that situation may be able to refinance those loans at a lower rate.
All those factors combined are helping support the overall economic growth with a stronger housing market. Builders are finding themselves busy, scrambling to hire workers to meet the renewed demand for new construction.
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