Home Prices Rise, Spurred by Low Interest Rates
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iStockphoto/Thinkstock(NEW YORK) — Home prices rose again in July as builders reported increased orders. The S&P/Case-Shiller showed an increase of 1.6 percent for the month in its 20-city home-price index.
Average home prices increased by 1.5 percent for the 10-city composite from June.
Last month, Case-Shiller’s three indices showed positive annual growth for the first time since the summer of 2010. All three composites of the Case-Shiller indices — the national, 10- and 20-city composites — were up for June from one year ago.
Record low interest rates, pushed down by the Federal Reserve, are encouraging more home buyers to finally purchase after the housing bubble burst five years ago. Earlier this month, the nation’s central bank announced the federal funds rate — the rate at which banks borrow from each other — would remain near zero at least through mid-2015 due to the struggling unemployment situation in the country.
In its analysis released Tuesday morning, the S&P/Case-Shiller report showed Dallas and Washington, D.C., had no change in their annual rates, while rates for Cleveland, Detroit and New York worsened in July.
“The news on home prices in this report confirm recent good news about housing,” said David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. “Single family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing. All in all, we are more optimistic about housing. Upbeat trends continue. For the third time in a row, all 20 cities and both Composites had monthly gains. Stronger housing numbers are a positive factor for other measures including consumer confidence.”
At online real estate analytics firm Zillow, Chief Economist Stan Humphries said, “July shows another strong month of appreciation for Case-Shiller albeit down slightly from June’s revised monthly pace and somewhat lower than our expectations. The indices have, however, still yielded a better annual comparison than last month, reflecting organic growth in the housing market, which further confirms what we’ve been seeing over the last few months in other data: the housing market is in recovery mode. Given the more recent August, Zillow Home Value Index was down slightly month-over-month, we anticipate Case-Shiller’s monthly appreciation to slow even more substantially in August.”
Zillow released housing numbers for August last week.
Copyright 2012 ABC News Radio