According to the May 28, 2013 Case-Shiller 20-City Home Price Index (HPI) report, home prices rose strongly in March. The report showed that home prices rose a very strong 1.1 percent on a seasonally adjusted basis. The reading marks the fourth straight gain of over one percent. On a year-over-year basis, home prices rose 10.9 percent (not seasonally adjusted). The monthly reading is the strongest reading since 2005, during the heady days of the housing market boom, and the Y/Y reading of 10.9 percent is the first double digit gain seen since May of 2006.
Though the news reflects well for the economy, and for “the market,” caution may still be warranted given that much of the recent housing activity seems to have been driven by investor purchases rather than by individual home buyers. Those who feel that the “wealth effect,” which was created by the 2000 housing market boom, may be reemerging might want to recall that the unemployment rate during the height of the housing boom (i.e. mid-2000’s) was in the five percent range — today it is still in the mid-seven percent range.
Nonetheless, this news should bode well for the market — at least in the near term.
