Thoughts from Lynn: The Sound of Thawing
The Sound of Thawing
What’s that sound? Ice melting on the river? It is a distinctive sizzle sound. No, wait, it is the United States real estate market! The freeze was deep. House prices in the United States, measured by the S&P/Case-Shiller price index, fell 34% from the second quarter of 2006 through the fourth quarter of 2011. By the beginning of 2012 slight signs of improvement were seen although experts were still saying that it could still take a few years for housing to return to normal. Homeowners believed their home value would rise 0.2 percent in 2012 according to their response to Fannie Mae’s National Housing Survey that November.
But just as ice on the river breaks up quickly with warmer weather, nationwide housing prices rose by 5.5% for the year ended November 30, 2012 as measured by the S&P/Case-Shiller price 20 city composite. Volume was greater than recent year volumes. Median sales price of new homes sold increased by 17% year over year to $256,900 in August 2012, according to the U. S. Census Bureau.
Looking ahead, the United States real estate market looks strong. Prices are continuing to rise as demand is beginning to exceed supply. Home inventory, reported by the National Association of Realtors, for the fourth quarter of 2012 was down 21.6%, the lowest since 2001. Foreclosures are falling. And, as unemployment is also falling, pent up demand is kicking in. Low mortgage rates remain. It appears that the housing market is now ready to take its customary position as a strong engine for the U.S. economy.