In twenty cities throughout the United States, home prices jumped more than forecast in September compared to the same time last year. Fortunately for the housing market, this suggests that the residential real estate market is sustaining momentum.
The S&P/Case-Shiller index of property values shows a 5.5 percent increase—the biggest, “year-over-year gain since August 2014 and followed by a 5.1 percent advance in the previous month.” A median estimate by economists called for a 5.2 increase, and the national average rose 4.9 percent. The limited number of homes for sale is keeping houses in steady demand, and supporting price appreciation.
Additionally, unemployment is at its lowest level since 2008 and prospects for a big pickup in wage gains should continue to support residential real estate. The market’s momentum is important as the Federal Reserve begins to reconsider the move to raise the benchmark interest rate. The question is not if the Fed will make the decision, but when. A strong housing market will be far more likely to withstand a higher interest rate than a struggling one.
All of the 20 cities surveyed for the home prices index show, “a year-over-year gain, led by an 11.2 percent increase in San Francisco and a 10.9 percent advance in Denver. Chicago, where home prices climbed 1.1 percent, registered the smallest 12-month increase.” This year-over-year index is based on records that date back as far as 2001. The wealth of data helps market watchers recognize the evolution of home prices over the years.
Additionally, “home prices in the 20-city index adjusted for seasonal variations increased 0.6 percent in September from the prior month, twice as much as the 0.3 percent median projection in the Bloomberg survey and the biggest gain since March.”
While the residential real estate market is doing well, home hunters are still facing those higher home prices. Additionally, the rising cost of rent is encouraging more people to make the move into a home soon. At Apex Financial Advisors, we know that buying a home is an important goal for couples, and we work alongside them every day to help develop a strategy to afford the big investment. If you are considering a home—whether it is your first or fifth—talking to one of our financial experts can help make the process a successful one. Call us today at Apex Financial Advisors to start discussing your home dreams.