Great news for Bend and new construction: Housing prices in the 20 major housing markets marked an increase for the third straight quarter, now rising at an annual rate of about 7.3 percent. Of this jump, new homes accounted for a good portion of the increases, reporting a 15 percent jump in number of homes sold in January, and a 30 percent jump since a year ago.
Reasons for the jump in new home building include a low supply of homes on the market. Now at a 4.1-month supply, this is the lowest number of homes available since the housing bubble days of 2005.
Other good news for housing?
- Home builder stocks are rallying
- Housing data is spiking the DOW
- Interest rates, though rising slightly, are sill near record-lows
- Foreclosures have dropped
- Building permits are on the rise
- Unemployment is down (bring more buyers to the market)
All of this is very good news for housing, and good news for prospective home buyers as well.
The resulting rise in home prices was the biggest annual increase since the second quarter of 2006, near the height of the housing boom. The sales of new homes were at the highest level since July 2008, about two months before the bursting of the housing bubble slammed the brakes on home sales…
“These movements, combined with other housing data, suggest that while housing is on the upswing, some of the strongest numbers may have already been seen,” said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices.
Still, Cooper Howes, U.S, economist for Barclays, said that even if growth slows, there’s no sign of a new housing bubble.
“We don’t think we’re at the point where we have to talk about overheating,” he said. “The numbers are strong, but that’s just coming off a really low base.”
Barclays is forecasting a 6% to 7% price gain this year, and 5% to 6% in 2014.
The rise in home prices can provide a lift for the economy as it increases household wealth and allows homeowners who had previously owed more than their homes were worth to refinance their mortgages, putting more money in their pockets.
“This ‘wealth effect’ will play a significant role in supporting consumer spending this year,” said Joseph LaVorgna, chief U.S. economist for Deutsche Bank.
The increase was broad-based, with 19 of the 20 markets showing gains in December. New York posted the only decline, with prices edging down 0.5% from a year earlier.
Some of the markets with the biggest rise were those hurt the worst by the bursting of the housing bubble in six years ago — prices jumped 23% Phoenix, 14.4% in San Francisco, nearly 13% in Las Vegas and just over 10% in Miami and Los Angeles. Detroit enjoyed a 13.6% rebound in prices.
via “Housing recovery gains strength,” KTVZ.com.