The latest S&P/Case-Schiller housing report showed average home prices for 20 cities increasing by 9.3% for the year ending in February 2013. The index rose 0.3% between January and February of this year. This represented the biggest annual increase in S&P/Case-Shiller Home Price Index since May 2006.
After being crushed nationwide in the Great Recession of 2008, the housing market has begun to heal, but is still a long way from normal after a collapse in housing prices and a loss of trillions in home valuations.
One major driver for housing is record low mortgage rates as the Fed has continued to purchase mortgage-backed securities to the tune of $85 billion a month since December. As the Fed dials down QE3, housing may yet see a cooling off of demand as rates rise.
David M. Blitzer, Chairman of the index committee at S&P Dow Jones Indices wrote in the housing report:
“Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy. The 2013 first quarter GDP report shows that residential investment accelerated from the 2012 fourth quarter and made a positive contribution to growth.
One open question is the mix of single-family [homes] and apartments; housing starts data show a larger than usual share is apartments.”
Bloomberg offers more information on the resurgence in housing in the report below.
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