Home Prices Rise at 2006 Rates

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Pool builders and retailers were cheered by the strong advance of home prices for the 20 metropolitan regions surveyed in Standard & Poor's/Case-Shiller index. The measure reported a 12.4 percent annual Increase in July, offering further evidence of a strengthening housing market — a crucial leading economic indicator for the leisure aquatic industry. 

According to the Index, U.S. home prices rose by their fastest pace in more than seven years during July, as the slowly shrinking supply of homes lifted valuations. Fewer properties are selling out of foreclosure and mortgage rates remain low, although up nearly a percentage point since May. This rise in rates, especially if it continues as the Fed tapers its QE purchases, could ultimately test buyers' willingness to pay more. 

For at least four months in a row, all 20 cities showed monthly gains. Phoenix has posted 22 consecutive months of positive returns. In Las Vegas, the year-over-year returns showed an even brighter outlook as a +24.9 percent increase in June turned to an impressive +27.5 percent increase in July. 

“Home prices gains are holding their 12 percent annual rate of gain established by the two Composite indices in April,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The Southwest continues to lead the housing recovery. San Francisco, Los Angeles and San Diego are up 24.8 percent, 20.8 percent and 20.4 percent respectively. However, all remain far below their peak levels. 

“Since April 2013, all 20 cities are up month to month; however, the monthly rates of price gains have declined. More cities are experiencing slow gains each month than the previous month, suggesting that the rate of increase may have peaked. 

“Following the increase in mortgage rates beginning last May, applications for mortgages have dropped, suggesting that rising interest rates are affecting housing. The Fed’s announcement last week that QE3 bond buying will continue for the time being may have only a limited, though favorable, impact on housing.”

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