New data shows the U.S. housing market strengthening. The S&P Case Schiller Home Price Index shows average home prices in 20 of the biggest US cities rose more than 9 percent in the last 12 months. That’s the biggest gain in nearly seven years. Analysts say it may be one of the reasons why U.S. consumer confidence is improving.
Five years after the collapse of the U.S. housing market, Americans seem ready to buy again. Pending home sales are up 7 percent over last year, foreclosures are at a seven-year low and the number of homes for sale, continues to decline.
“Housing sales numbers are continuing to trend up. In fact, if anything, realtors are saying they are looking at shortages of inventories of homes for sale,” said Sam Coffin, an economist at UBS Securities.
The lower inventories are pushing home prices higher. And that’s giving builders a much needed boost, says Ken Simonson at Associated General Contractors of America.
“When you look at the broader construction industry, there’s quite a boom going on in apartment construction, more recently, in single family homes and some of the private non-residential categories,” Simonson said.
The renewed optimism and rising stock prices may be aiding in an otherwise slow U.S. recovery. It may also explain why consumer confidence improved sharply in April, says fund manager Brad Friedlander.
“Borrowers and personal consumer balance sheets are a lot better than they were a few years ago. So we are seeing, beginning to see a rebound,” Friedlander said.
Despite a much improved housing picture, economists say for now, it’s unlikely to have a measurable impact on U.S. unemployment. New jobs data to be released Friday is expected to show unemployment unchanged at 7.6 percent.