The housing market gave more signs of improvement on October 30 as the Standard & Poors/Case-Shiller 20-city home price index rose 2% in August from the previous year.
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Prices increased in 17 out of the 20 areas, an improvement over the July report of 16 out of 20 and only 3 out of 20 in January.
The report was particularly encouraging since activity tends to slow down after the peak summer sales season. This report indicates the housing recovery is now beginning to sustain itself.
But even with inventory from foreclosures dwindling and a surge in the lower end of the market, household incomes are still under pressure. If job and income growth do not pick up, the improvement in the housing sector may flatten.
The recovery in housing is being driven by rising demand, declining inventory, and a low interest rate environment.
The cost of home ownership has now fallen to the point where monthly mortgage payments are below rent levels in some markets. The breadth of the recovery
is also encouraging.