Housing continues to show signs of improvement, with the most recent S&P/Case-Shiller index reading improving, but the road to recovery remains a long one.
Home prices continue to rise
According to the S&P/Case-Shiller home price index, average home prices increased 1.6 percent in July compared to the previous month, marking the third consecutive month that all 20 major markets studied in the index have improved, with a general uptick continuing. Home prices are now 1.2 percent above July of last year.
The index covers over 80 percent of the housing market, with a 10-city composite index, and a 20-city composite index, all of which showed small signs of improvement in July, its most recent reading. Traditional media outlets are frequently found calling housing recovered, and healthy, but we continue to assert that saying as much is short-sighted and only takes pricing into account. While improving values is one of many potential signs of health, housing has a long way to go before all vital statistics are back to “normal,” particularly with the high default rates compared to before the boom and bust, tight lending not only for consumers but for builders, to name a few factors.
Improving indices across the board
David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices said, “The news on home prices in this report confirm recent good news about housing. Single-family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing.”
Inventory levels remain extremely tight, which combined with historically low interest rates have helped to improve home prices, but to call housing recovered is certainly a bad call. Progress is being made, but a one percent improvement over one year, does not a healthy market make.