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The Journal Gazette

  • Associated Press photos Toyota salesman Doug Lund shows the engine of a Prius C Hybrid to shopper Mary Jean Jones in Salt Lake City last month. The Conference Board's consumer confidence index hit 121.1 this month, its highest level since July 2001.

  • Homes are shown under construction in Woodstock, Ga. The S&P reported its home price index rose 5.6 percent in May.

Wednesday, July 26, 2017 1:00 am

Another housing bubble feared

S&P index reports prices 3.2% higher than July '06 peak

CHRISTOPHER S. RUGABER | Associated Press

WASHINGTON – U.S. home prices reached a new high in May for the sixth straight month, raising fears of another housing bubble roughly a decade after a previous one burst.

The Standard & Poor's CoreLogic national home price index, released Tuesday, increased 5.6 percent in May, the latest data available. It is now 3.2 percent higher than its July 2006 peak.

Some analysts downplay the notion of a new bubble, and the unrelenting price increases may already be cooling sales. Other aspects of the last decade's housing boom and bust, such as rapid sales increases and surging home building, aren't happening now.

“Price increases vary across the country, unlike the earlier period when rising prices were almost universal,” said David Blitzer, chairman of the Index Committee at S&P.

A separate price index maintained by the National Association of Realtors is also rising steadily, though it remains about 9 percent below its 2006 peak. 

Another key economic report released Tuesday showed U.S. consumers gained confidence this month, with more Americans pleased by current conditions and more hopeful about the future.

The Conference Board, a New York-based business research group, says its consumer confidence index in July rose to 121.1, up from a revised reading of 117.3 in June. Consumers' views on current conditions hit the highest level since July 2001, while expectations for the future rebounded after a slight dip in June.

Economists say the strong readings on consumer confidence are being bolstered by a healthy job market, with unemployment at a low 4.4 percent in June.

Consumer spending accounts for 70 percent of U.S. economic growth.