The Case-Shiller home price index, a closely-monitored monthly report from Standard & Poor, revealed home prices posted their biggest gains in seven years in April. For three months now, home prices have risen in each of the 20 major U.S. cities monitored in the report.
The New York Times offered up an encouraging view of the housing market in an article last week that cites continued increases in new and existing home sales as well as the number of building permits. As home prices continue to rise, construction companies are responding by ratcheting up building projects and hiring additional workers. Additionally, the Times reports consumer confidence is also on its way up.
The chief economist for RDQ Economics, John Ryding, spoke with the Times about the latest string of encouraging data.
“Five years after the start of the financial crisis in earnest, and four years and a week’s time from the beginning of the economic recovery, we’re finally starting to get more of a pickup,” Ryding told the Times. “It’s been a very drawn-out process, but you have to remember what we’ve been digging our way out of.”
The Case/Shiller home index showed home prices were up on average by 10.9% in April as compared to April 2012. The Times notes there are several factors driving the housing recovery, beginning with a loosening of the labor market. In fact, jobs have increased in each of the last 31 months, which means more people are able to spend on homes.
However, the current supply of available homes is low and with demand increasing, prices are of course going up. If that trend continues, more people are likely to in turn put their homes on the market and the recovery will accelerate even faster.
An economist with JP Morgan Chase told the Times that while home prices are likely to continue to rise in the coming months, it isn’t likely to be at the double-digit rate seen last month.
“You’ve had this dynamic that has been favorable for price increases now, but it’s also favorable for supply to come back on market, so that will mean some moderation in the pace of price increases,” Daniel Silver told the Times.