U.S. Home Prices See Biggest Jump in 7 Years

home prices real estate housing market economy recovery mortgage rates
Wilfredo Lee/AP
By CHRISTOPHER S. RUGABER

WASHINGTON -- U.S. home prices jumped 12.2 percent in May from a year ago, the most in seven years. The increase suggests the housing recovery is strengthening.

Real estate data provider CoreLogic said Tuesday that home prices rose from a year ago in 48 states. They fell only in Delaware and Alabama. And all but three of the 100 largest cities reported price gains.

Prices rose 26 percent in Nevada to lead all states. It was followed by California (20.2 percent), Arizona (16.9 percent), Hawaii (16.1 percent) and Oregon (15.5 percent).

CoreLogic also says prices rose 2.6 percent in May from April, the fifteenth straight month-over-month increase.

Steady hiring and low mortgage rates have encouraged more Americans to buy homes. Greater demand, a limited number of homes for sale and fewer foreclosures have pushed prices higher. Prices are still 20 percent below the peak reached in April 2006, according to CoreLogic.


Sales of previously occupied homes topped the 5 million mark in May for the first time in 3½ years. And the proportion of those sales that were "distressed" was at the lowest level in more than four years for the second straight month. Distressed home sales include foreclosures and short sales. A short sale is when a home sells for less than what is owed on the mortgage.

Home sales are expected to increase in the coming months. That's because the number of people who signed contracts to buy homes rose in June to the highest level since December 2006. There's generally a one- to two-month lag between a signed contract and a completed sale.

One worry is that higher mortgage rates could slow the housing recovery. Still, rates remain low by historical standards. And increases in rates could boost home sales. That's' because many Americans may act to lock in the lower rates before they rise further.

A survey by the University of Michigan released last week found more Americans believe it is a good time to buy a home because both rates and prices are just starting to rise.

Rates have been trending higher for two months. And the average rate on a 30-year fixed mortgage leaped to 4.46 percent last week, according to mortgage buyer Freddie Mac. That's the highest in two years and a point more than a month ago.

Mortgage rates surged after Federal Reserve chairman Ben Bernanke said last month that the Fed could scale back its bond buying later this year and end it next year if the economy continued to strengthen. The bond purchases have kept long-term rates down.

Economists say that higher mortgage rates are unlikely to stifle the housing recovery. A more critical issue is whether potential buyers can get loans. There are signs that banks have become more willing to extend mortgages.


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13 Comments

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robert.beron

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July 13 2013 at 4:09 AM Report abuse rate up rate down Reply
tjam106694

It sounds like Frankie is one of the sheep.

July 03 2013 at 8:49 AM Report abuse rate up rate down Reply
toosmart4u

Way to go President Obama, finally we are making headway in the mess from the bush era.

July 03 2013 at 4:57 AM Report abuse rate up rate down Reply
Cate

I live in Las Vegas and I can assure you that prices did not rise 26%. There are 40,000 homes on hold in some stage of foreclosure that the banks are sitting on. So it is making it appear that the inventory is very low. Over 1/2 of all the homes in Las Vegas, and remember that 2 million people live here, are still underwater.

July 02 2013 at 11:28 PM Report abuse rate up rate down Reply
Craigermt

I am sure that after years of hearing Obama talk how people were taken advantage by the banks, not that they took out loans they couldn't afford, we will soon hear that people cannot afford housing and need government programs and payments to make sure they can afford a home. Time for people to work for what they get and buy what they can afford.

July 02 2013 at 9:21 PM Report abuse +1 rate up rate down Reply
donovansdanes

Not according to Zillow.com. Home owners really need to check out not only the price, but the misinformation Zillow publicly lists about your home.

This outfit should have a class action lawsuit filed against them.

July 02 2013 at 8:39 PM Report abuse +3 rate up rate down Reply
thefosz

...


These so call gains in the housing market are not sustainable. The population of kids now getting into the buying of homes for themselves is much smaller. The economic worries of America and SEQUESTRATION will completely stop most markets from growing at all.



...

July 02 2013 at 5:13 PM Report abuse rate up rate down Reply
wongtpa

Most still underwater but this helps. Don't let Obama screw it up!

July 02 2013 at 3:39 PM Report abuse -1 rate up rate down Reply
1 reply to wongtpa's comment
Frankie

You mean don't let the Republicans screw it up...they've screwed everything else.

July 03 2013 at 3:55 AM Report abuse +1 rate up rate down Reply
Gumby

Homeowners are actually waiting for home prices to fall even further until interest rates start climbing. All of sudden, homeowners know that it can no longer be lower any more so they rush to grab bargains now. What is to follow is a major sell off in the stock market to raise cash to be able to make down payments on rising home values? This is a classical real estate ploy . It happens before . Stock market will resume climbing again if energy costs or anything else is stable for as long as possible. Oil prices tend to eventually spike once again and throw us back into another tail spin. We are never so careful with our oil supply so to avoid another oil shortage.. Will we buy enough hybrids and electric vehilces to help stall the return of another oil shortage until a much later date ? This is possible. For now, it is real estate inthe spotlight .

July 02 2013 at 3:34 PM Report abuse rate up rate down Reply
Frank and Barbar

Rising mortgage rates are good because banks are more willing to incure the risk associated with financing a mortgage. When banks losen thier grip on capital and start loaning money out again, the economy will start to recover. People will borrow money and business will have to hire people to meet increased demand. Economics 101. Supply was high and demand was low. Supply is low, so demand goes up. Sub Prime mortgages where there to help the poor get into a home of thier own. The problem is that there was no cap on the amount borrowed under this program. That is why the housing market collapsed.

July 02 2013 at 1:37 PM Report abuse +1 rate up rate down Reply