For the economy to recover, the housing market must recover. When consumers can barely pay their mortgages, they’re unlikely to spend money on other things – and when consumers don’t spend money, the economy stagnates.
There have been signs of recovery in the housing market in recent months, as we’ve reported, and now there’s more good news:
- The Case-Shiller Index, a composite of statistics from 20 cities, showed that housing prices rose 4.3% from October 2011 through October 2012.
- It appears that housing prices will see their first gain for the year since 2006.
- The National Association of Realtors’ Pending Home Sales Index is at its highest level in five years and has risen for 18 consecutive months. At the end of October, it was at 104.8, up 13.2% from a year earlier.
While these are positive trends, statistics can be misleading. Many current buyers are investors, who are purchasing homes to rent out, not to resell. If investors believed that housing prices were going to continue rising, they would buy and resell.