Prices of US homes are continuing to rise and are now at their highest levels in six years. This indicates the housing market will play a more central role in the economic recovery during 2013.
Historically low mortgage rates will spur a third consecutive rally in home prices this year. This will keep property values on the rise and counter the effect of the payroll tax increase that went into effect this month.
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The payroll tax hurt confidence a bit in January with the Conference Board’s sentiment index falling to 58.6 from 66.7 in December.
It was the largest single-month drop in consumer confidence since the budget debacle in August of 2011.
Nineteen of the 20 cities in the Case Shiller housing price index showed year-over-year gains.
Phoenix showed the biggest price jumps with 22.8% and followed by San Francisco at 12.7%.
New York was the only state with negative month-to-month and year-over-year comparisons.
Profits at the largest homebuilder by volume doubled during the first quarter as demand for new houses