Index Shows Home Prices Up 5.7% From January 2015
According to the latest results from the Standard & Poor’s/Case-Shiller 20-city home price index, in January the index rose 5.7% from its January 2015 levels, and 0.8% from its December 2015 levels. Bloomberg News reports that January’s results aligned with economists’ forecasts. The rate of home-price growth is up slightly from the 5.6% annual increase seen at the end of 2015. Bloomberg says home values are increasing more rapidly than incomes, and cautions this may threaten a recovery in the housing market because it puts home-ownership out of reach for many low-income and first-time home buyers. The AP points out that home values have “risen 2.6 times faster than average hourly wages, which have improved just 2.2 percent.” A tight supply of homes on the market “have fueled much of the price growth, as low mortgage rates and steady hiring have sparked demand.” The Wall Street Journal says economists expect the pace of price increases in housing to moderate sometime this year because buyers’ salaries aren’t keeping pace, particularly on the West Coast where cities like San Francisco, Portland, and Seattle are showing double-digit housing price gains. S&P Down Jones Indices managing director David Blitzer said of the housing market, “While low inventories and short supply are boosting prices, financing continues to be a concern for some potential purchasers, particularly young adults and first-time home buyers.”
What This Means For Small Businesses
Small businesses involved in the housing market, particularly in the construction sector, are looking for signs of less uncertainty in the market. Unfortunately, the latest data indicate that the housing market is still struggling to adjust following the recession.
Reuters also covers the story.
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.