Home prices appeared to reach bottom in 2012 and begin slowly climbing upward. Record low mortgage rates and efforts by the federal government to slow the flood of distressed properties hitting the market did have the desired effect.
The Associated Press reports the Standard & Poor’s/Case-Shiller national home price index for October 2012 was 4.3 percent higher than October 2011. New home sales rose by 4.4 percent in November 2012 to a seasonally-adjusted annual rate of 377,000, according to The National Association of Home Builders (NAHB). NAHB believes new home sales will increase another 22 percent in 2013 to an annual rate of 456,000.
Existing-home sales were up in all four regions of the country for the month of November, according to The National Association of Realtors (NAR). Sales rose 5.9 percent in November.
Patrick Newport, U.S. economist at IHS Global Insight, wrote, “Put simply, inventories are dropping because we are not building enough homes. That is why home prices are rising in most markets today. Higher home prices, in turn, are bringing more builders into the game.”
Rising prices encourage home sellers, who have been waiting for the market to recover, to put their home on the market. The rising prices also give builders the confidence to build.
We enter 2013 with a lot of reasons to be optimistic along with a few reasons to be cautious.
Banks continue to be stingy with loans, unemployment remains high, and foreclosures began rising again at the end of 2012, according to RealtyTrac.