Data Shows Home Prices Up 5% In July As Demand Grows
The latest S&P/Case-Shiller 20-city home price index shows that in July, prices for homes across the US rose an average of 5% from July 2014. This is up from an average increase of 4.9% in June from the same period one year ago. All 20 cities on the index saw prices for homes rise over the past year, the AP reported. San Francisco saw the largest gain, a 10.4% increase, while Denver saw a 10.3% boost, and Dallas was third with an 8.7% increase. Though demand is up as job growth continues, housing prices in July were also boosted in many areas due to the “limited” number of homes for sale. Currently, the housing inventory equals 5.2 months of sales, less than the typical 6 month supply found “in a balanced housing market.” Prices for housing rose much less quickly in Eastern and Midwestern markets, the survey found, with prices up 1.7% in Washington, DC, 1.8% in Chicago, and 1.9% in New York City. Zillow chief economist Svenja Gudell said, “The market is continuing to heal and find its footing in a new environment, one where highly local factors…matter more than national trends.”
What Happens Next
The AP noted that “housing faces several challenges in the coming months,” such as housing prices increasing “at more than double the rate of wages,” which may steer potential real estate buyers from the market. Furthermore, mortgage rates “could be headed up soon,” with the Federal Reserve expected to raise interest rates later this year.
What This Means For Small Businesses
Small businesses in the construction sector may be especially affected by sales in the housing market. The latest data indicates that the housing market is recovering, though gains are uneven depending on locations. Overall, there is still much work needed to strengthen the overall economy. However, increasing home sales are a sign economic growth is headed in the right direction.
Additional Reading
NFIB previously noted data on August existing home sales.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
