Home Prices Set Record Monthly Surge in Major Index

Home Prices Set Record Monthly Surge in Major IndexFigures through April 2013 showed that average home prices rose 12.1 percent year-over-year for 20 U.S. cities, and set a record month-to-month surge of 2.5 percent, according to the S&P/Case-Shiller indices, a widely-followed measure.
All 20 cities showed positive year-over-year returns for at least the fourth consecutive month. Atlanta, Dallas, Detroit and Minneapolis posted their highest annual gains since the start of their respective indices.
On a monthly basis, all cities — with the exception of Detroit — posted positive change.
However, these gains may not hold up since mortgage rates have climbed past 4 percent since April.
Last week’s announcement by Federal Reserve Chairman Ben Bernanke regarding a likely tapering of the Fed’s bond purchases has triggered a massive sell-off in Treasuries, sending yields higher.
Higher interest rates will likely slow home price growth.
Nonetheless, S&P/Case-Shiller does not see a slowdown in the overall housing recovery.
“Home buyers have survived rising mortgage rates in the past, often by shifting from fixed rate to adjustable rate loans,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “In the housing boom, bust and recovery, banks’ credit quality standards were more important than the level of mortgage rates. The most recent Fed Senior Loan Officer Opinion Survey shows that some banks are easing credit restrictions. Given this, the recovery should continue.”
Through the end of April 2013, average home prices across the United States were back to their early 2004 levels for both S&P/Case-Shiller’s 10-City and 20-City indices.
Measured from their June/July 2006 peaks, the peak-to-current decline for both indices is approximately 26 percent-27 percent. The recovery from the March 2012 lows is 13.1 percent and 13.6 percent, respectively.
Home Prices Set Record Monthly Surge in Major Index

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