Home prices in 20 major US cities were up 5.5% in November compared with a year earlier, their biggest jump in more than 6 years. “Housing is clearly recovering,” said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. “Prices are rising as are both new and existing home sales.” These figures confirm that housing is contributing to economic growth. Housing prices have been helped by a number of factors in recent months, including increased sales of both new homes and previously-owned houses, a drop in foreclosures, a drop in the nation’s unemployment rate, and near record-low mortgage rates.
Michael Gapen, senior U.S. economist for Barclays, recently commented that the fundamentals for the housing market are now strong enough that his firm is forecasting another 6-7% rise in prices in 2013, and a 5-6% rise again next year. He said that the tight supply of homes for sale on the market should support continued price increases, and that the decline in foreclosed homes for sale is reducing the drag that those distressed properties had on overall prices.