Housing Market – 3rd Quarter Update

Home prices snatched their strongest gains since 2005, climbing 5.9% from January through July and signaling the housing market’s steady trudge toward recovery. For the broader economy, the turn in housing could provide a much-needed boost if it continues.

Rising prices could eventually lift consumer spending if homeowners begin to feel wealthier again. Housing construction, a big generator of jobs, also has the potential to play a major role in economic growth.  (Source: WSJ, September 26, 2012, A1 Housing Market Displays)

Rising prices largely reflect a dwindling number of foreclosed homes being sold by banks as well as stronger demand for those properties from investors.Foreclosures and other “distressed” homes typicallysell at larger discounts, and with fewer of those properties selling, prices are under less pressure. The median sales price for new homes in August was $256,900, up 17% from a year ago, and the highest level since December 2004. (Source: Bob LeClair’s, September 15, 2012)

Rising demand, especially at the low end, is putting upward pressure on prices as traditional buyers, as opposed to investors, feel more confident about jumping into the market.