Economists have said there will be no meaningful recovery until the housing market recovers. Finally that seems to be happening.
Standard & Poor’s authoritative Case/Schiller index shows home prices nationally increased 1.2 percent in July over the same month last year. As the Associated Press noted, that’s the second straight year-over-year gain after two years without one.
Prices rose from June to July in the 20 cities tracked by the index. Again as the AP notes, that’s the third straight month in which prices rose in every city.
In the 12 months ending in July, prices went up in 16 of the 20 cities, including by 16.6 percent in hard-hit Phoenix.
Only Atlanta, Chicago, New York and Las Vegas were left behind.
The recovery, and indeed it does seem to be a real recovery, is attributed to small but steady increases in home prices, fewer foreclosures and record low mortgage rates. The average rate of a 30-year fixed mortgage has been less than 4 percent all year. And now that the Fed has announced plans to buy $40 billion of mortgage-backed securities each month, rates are likely to stay low.
Other measures also indicate a recovery: sales of previously occupied homes in August were the highest since May 2010, and builder confidence is at a six-year high.
Home prices are still 30 percent below their June 2006, peak but these latest figures are good news for both the health of the housing market and the broader economy. We finally seem to be climbing out of the hole.