The S&P/Case-Shiller quarterly index of property rates across 20 cities climbed 4.3% since last year. This is the largest annual increase since May 2010.
The record low mortgage rates are pulling back consumer confidence and investment. RyanWang, from HSBC Securities Inc. said the sector rebound could add as much as a trillion dollars to family wealth during this year.
Stocks plunged for three days in a row as retail sales struggled. The S&P’s 500 Index fell by 0.6% to 1,418.27.
A consistent improvement in the housing sector is a source of strength of the American economy struggling in the midst of fears of $600 billion in regressive taxes and public spending cuts.
As per another report manufacturing grew for a second month in a row during December in areas covered by the Federal Reserve Bank at Richmond. Regardless of this, sales and orders rose at a relatively slower pace compared to November.
The price hike picked up pace from a 3% increase for the annual period ending September.
Commerce Department data show the residential construction sector contributed 0.3% to GDP for the whole year for the first time since 2005 when it added 0.36% to the economy.
During the month of October, unadjusted prices dropped 0.1% a seasonal fluctuation typical to the sector; adjusted home prices climbed 0.7% . 17 cities in the index reported gains; Las Vegas and San Diego were the two biggest gainers marking a 2.4% and 1.7% increase while Chicago recorded the highest decline in prices (0.7% ) over the last month.
Inventors of the index Economists, Robert Shiller and Karl Case said a yearly trend would be a more reliable indicator.
The yearly trends for 18 cities included in the index showed increase; Phoenix led the race with 2.17% hike followed by a second high of 10% in Detroit. David Blitzer, chairman of the Case/Schiller index committee, said the industry is ready to pay back to the economy at large.
Virginia based MacLean reported the lowest average rate of 3.37%, since 1972 for a 30-year fixed mortgage.
Only two things can push it down the hill from here, the job market slump or a failing budget negotiation is Washington. The Fed is determined to zero in on the benchmark interest rates until unemployment fall below 6.5% and inflation remains under 2.5% for two consecutive years. The budget debates still seem to go nowhere.