U.S. home prices rise above the past 2007 peak amid healthy sales
It has taken a few years but according to the Case-Shiller national home price index, U.S. home prices have fully recovered from their steep plunge during the housing bust and Great Recession. Sales of existing homes rose at a faster pace in October than the previous decade. Builders have started building the most new homes in the past nine years last month.
That’s the good news yet prices have not fully recovered in many cities and other indexes point to home prices still below their peaks.
Steady job gains and low mortgage rates over the years have encouraged more Americans to buy homes. But the supply of available homes has declined, causing a shortage of homes on the market setting off bidding wars and pushing up prices at a rapid pace.
Seattle, Portland and Denver reported the largest annual gains in September for the eighth straight month.
The continuing recovery in home prices helps raise Americans’ household wealth and should provide some homeowners with an incentive to sell. The low number of homes for sale is partly because many people have very little equity in their homes and would not really benefit from a sale. Others have remodeled and love their “new” homes. Rising home values will help counter that trend.
There are still lots of cities remaining far below their pre-recession peaks, like Miami, Tampa, Phoenix, and Las Vegas.
Low inventory of homes for sale is a big problem in driving house prices up. That coupled with rising interest rates push a lot of first-time homebuyers out of the market. Another factor his incomes are not growing as fast as Home prices have been rising the past few years
Since the real estate market began recovering in 2012, prices have grown much faster than Americans’ incomes. That has made it difficult for many would-be buyers, particularly younger Americans, to take advantage of low mortgage rates.