Housing prices in the U.S. have climbed to their highest rates in over six years, a strong indicator that the real estate market will have a large part in U.S. economic growth in 2013.
According to recent data, the S&P/Case-Shiller index rose 5.5% since the last quarter of 2011, the most significant growth since the summer of 2006. The progress is expected to continue as mortgage rates hover around a record low while property values rise. Experts believe this will boost consumer spending and sentiment, despite this month’s payroll tax increase.
Millan Mulraine, an economist at TD Securities, explains: “Rising home prices are providing an important cushion.” Lower confidence and reduced paychecks “will slow consumer spending this quarter, but the effect will abate in coming months,” she added. “The souring in moods is a reflection of the brinkmanship in Washington and the higher payroll tax.”
Michael McKee, economics editor at Bloomberg, discusses the recent developments in home prices here.