Good News for Housing, Home Prices are Up Year-Over-Year

For the first time in nearly two years, U.S. home prices post year-over-year increases in June according to closely monitored pricing index. Home prices have increased as a result of the demand rise for the meager supply of homes on the market.

Home prices in June increased by 0.5%, compared to the previous year. That increase breaks the 20 consecutive months of price declines. Home prices still have a long way to go considering they’re below their 2006 figures by nearly 31% and are now closer to levels seen during the middle of 2003. This data was released by the S&P/ Case-Shiller 20-city home-price index on August 28.

Case-Shiller also stated in another report that home prices were up by 1.2% when compared to the previous year. Additionally, prices increased by 2.2% when compared to the first quarter on a seasonally adjusted annual basis. The increase seen over the quarter was the largest quarterly gain seen since 2005.

The most recent report from Case-Shiller follows others showing that prices jumped during the spring selling season. Prices started climbing months ago as inventories began to dwindled and as banks listed fewer and fewer foreclosures. Along with the banks not listing foreclosures are the sellers still waiting on the sidelines for prices to increase enough to entice them into putting their home on the market. Sellers just aren’t putting their homes on the market unless they have to.

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The record low interest rates associated with mortgages, along with the limited supply of homes listed for sale, are two main components that are aiding the growth in the housing market. Unfortunately, job growth during the same time frame failed to meet expectations.

The Federal Reserve is attempting to further bolster the economy through purchasing $40 billion in mortgage bonds, with the goal of further decreasing interest rates. This will be the third time that the central bank has made multi-billion dollar purchases under the QE3 program.

Homebuilders have begun to ask more for their inventory homes and many of the nation’s largest builders have shown significant growth throughout the year. With inventory levels decreasing and new home starts up, there has been a large increase in construction employment across the country. This is particularly good news for the job market, as construction leads to factory, transportation, and professional service jobs.

While some sectors of the economy are beginning to show promise, most agree that we are not out of the woods yet and that the housing market has a long way to go to reach the peak numbers it achieved during the boom.

If you are trying to buy a home buy can’t get approved, speak with LGI Homes Credit Counsel Services and ask about buying a new home with bad credit history.

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