Housing prices rose for the sixth month in a row, leading many experts to believe we are on the road to recovery. This is also improving consumers’ confidence in the recovery, as is indicated in the September report.
It has been a long road for the last 6 years since the housing market collapsed. However, we are beginning to see an upward trend in several important areas. Sales of existing homes and construction of new homes are continuing to rise as indicated by the numbers in both July and August.
The S&P/Case Shiller Report
This report provides information about the housing market in 20 metropolitan areas. For the sixth month, prices on homes have risen. It went up another 0.4 percent in July after being adjusted for seasonal fluctuations.
These numbers show a continued improvement from a year ago. Only 4 out of the 20 cities had negative numbers, with Atlanta showing the worst results, down almost 10 percent.
These numbers should continue to rise after the Federal Reserve made the decision to lower the record low mortgage rates even further. The move was designed to stimulate the economy by increasing home prices and home values for people who already have mortgages. This will help prevent homeowners from finding themselves underwater on a mortgage that is higher than the value of their home.
Fewer foreclosures this year have also contributed to the increase in home prices, as less distressed sales are crowding the market.
With the improved housing market, consumer confidence is also on the rise. In September, the level was up 70.3 percent from August’s number of 61.3 percent. This is the highest level since the big month of February.
This indicates that consumers have a more positive outlook on the job market and the ability to find a job, which can in turn increase consumer spending. These numbers are among the strongest seen since 2007 and should influence an increase in consumer spending.
According to the report, more consumers said they thought that business was good and would continue to improve. They also said they thought that more jobs were available, and that they expect their income to rise.
This optimism is in large part due to the improvement in the housing market, as consumers begin to see evidence of a recovery in place. While the movement is slow, it will influence other areas of the economy.
What does this mean on a practical level? Several businesses have increased their seasonal hiring in anticipation of the upcoming holiday season because they expect sales to be better than last year. For instance, Toys R’ Us is planning to hire around 45,000 temporary workers in the coming months. While these are temporary jobs, it does put more money in the hands of consumers, who will in turn spend it elsewhere.
We haven’t seen a quick rebound and nobody expects one, but the slow, steady recovery is encouraging growth in other areas.
As Housing Prices Rise, Consumer Confidence Increases - More Great News in the Housing Front.