The Standard & Poor’s/Case-Shiller Index of Housing Prices, which tracks housing prices in 20 major US metropolitan markets, rose 0.3 percent in September, compared to the previous month. Prices rose in 11 of the 20 markets.
The trend of rising US home prices which continued throughout the summer of 2009 ebbed slightly as the traditional home-shopping season ended. The Standard & Poor’s/Case-Shiller home price index of 20 major cities rose 0.3 percent to 144.96 in September, the fourth monthly increase in a row. The seasonally adjusted index is now up more than 3 percent from its bottom in May.
To those still on the sidelines, considering a home purchase, the index is still 30 percent below its peak, which occurred in April 2006. Many economists, however, have advised that you abandon your reluctance and buy a home now. This is especially true here in the Dallas area, where home prices have begun to improve quickly, following the rapid decline in available housing inventory.
The index, for those of you who want to understand it better, is based on a price index of 100, which was pegged in January 2000.
Nationally, analysts expect prices to dip again this winter as foreclosures increase and economic growth remains modest. Which trend will likely be exacerbated by uncertainty being created by Democratic health care legislation and unresolved cap and trade taxes.
The government announced November 24 that the economy grew at a 2.8 percent rate in the third quarter, a smaller increase than originally estimated. Forecasts for the next several months are no better, as unemployment could rise from the current 10.2 percent to as high as 11 percent in 2010.
“As long as the unemployment rate stays elevated, you’re going to see pressure on the pace of foreclosures, which are going to find their way back onto the market, depressing prices,” said the chief economic strategist with Miller Tabak & Co.
Home prices, in fact the entire housing market, are the key ingredient to rebuilding the beat down US economy. Homeowners feel wealthier when their property appreciates in value and are more likely to spend money. Rising prices also help millions of homeowners who owe more to the bank than their homes are worth.
Currently, roughly one in four homeowners face mortgage balances which exceed the value of their homes, an a record 14 percent of homeowners with a mortgage are behind on their payments, according to data from the Mortgage Bankers Association.
Americans’ confidence in the economy improved slightly in November from October, but holiday shoppers remained reserved in the face of the lagging jobs market and the risk they face with healthcare legislation, the Conference Board reported. While it is likely that home prices nationally kept rising through November, economists are concerned about a new wave of supply through 2010 as lenders bring foreclosed homes to market in many areas of the country, which could push prices back down, reversing recent gains.
Home prices rose in 11 major cities, with the strongest gains in San Francisco and Minneapolis, according to the Case-Shiller report. The Dallas housing market, which never really experienced the bubble, and consequently never experienced a bust, has begun what will be the steady – and short – climb back to a balanced healthy market. (See related article: The Mighty Texas Reigns Supreme in New Population Estimates – Jan 5, 2010 – Dallas Urban)
The steepest home price decreases in the September index were felt in Las Vegas and Cleveland. Compared with a year earlier, the 20-city index was down 9.4 percent, the smallest year-over-year decline since January 2008.
“With housing remaining an albatross around the economy’s neck, nothing would perk things up more than some increases in home prices,” wrote the chief economist at Naroff Economic Advisors. “That seems to be happening.”
The price reports came a day after the National Association of Realtors said home resales surged by more than 10 percent in October as buyers took advantage of the First Time Buyer Tax Credit.
The Census Bureau released new-home sales data for November which showed a decline in new homes sales of 11.3% from October to a seasonally adjusted 355,000 units.
The seasonally adjusted estimate of new houses for sale at the end of November was 235,000 representing a supply of 7.9 months at the current sales rate. However, the market in Dallas and Plano are considerably healthier, where there is less than a six month supply of new homes, including finished unsold inventory and unsold homes which are under construction. Traditionally, a market with a six month supply is considered balanced. The DFW Metroplex is likely facing a condition which will result is shortages in supply by the Third Quarter 2010.
Tax Credit Gives Home Sales Best Boost in Decade abcnews.go.com