S&p/case-shiller Index Shows Home Prices Up

By Author: Bruce Wills
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S&P/Case-Shiller index shows home prices up

(Source: Bloomberg) 28 April 2010

The S&P/Case Shiller index of home prices in twenty cities was up 0.6% in February as compared to the previous year and this shows first annual gains after December 2006.The National Association of Realtors informed the prices of existing homes rose 0.4% in March as the sales increased in the month.

Experts believe the prices will continue to increase until the mortgage rates are low and employment improves, although, an immediate jump in prices cannot be seen but the condition will prevent further dip in housing market.

The last year's government policy to buy mortgage backed homes ended in March and government bought at least $1.25 trillion value property through the program, which reduced the overall price in December 2009 but in the first four months of 2010, the prices rose and the market expects to see further improvement in prices.

Housing market improvement

Market experts believe it is not just the tax credit policy behind the increase in sales of homes, in fact, the improvement in economy ...
... and jobless condition helped people to invest in homes. The Conference Board's confidence index was up 57.9 in April, which is highest since the collapse of Lehman Brothers in September 2008.

In different housing markets of U.S., the prices are at different levels. In New York the home prices are at 2004 level and in Florida the rates are at the level of 2003 .The home prices were highest in 2006 and it was double the prices in 2000 .By April 2009 the prices were 33% low from the highest value, to get stable at 2003 level. Now, the home prices are 3.4% more in 20 cities from the low values of April 2009.

Improvement in Consumer confidence

Consumer confidence increased in April with the expectations of increase in jobs .According to polls American outlook rose to the level of October 2007, and one in five people said the economic condition is set to improve.

The sentiment of labor market is improving as the consumers started to spend and the major part of the consumer confidence depends on the recovery of housing market. Bloomberg conducted a survey where the median forecasts made by 78 economists see the confidence index to rise to 53.5.

Employment Gains

Employers raised payrolls in the past three months and the figures released by Labor Department on April 2 showed in the month of March, approximately, 162,000 jobs were added, which is highest in last three years.

The Federal Reserve Chairman Ben S. Bernanke said the main restrains for growth are weak construction, which reduced the number of jobs.

Increased spending

According to the survey conducted by Bloomberg spending has started to improve and it rose at the annual rate of 3.1% in the first three months of 2010,which is almost double the rate of fourth quarters and it is highest in the last three years.

G.M. to spend $890 million to upgrade factories, create jobs

Detroit-based General Motor on Tuesday reported about its plans to invest $890 million to redesigned five engines and its components, and increase investments in new products. The company plans to create or retain 1,600 jobs.

The company announced it will spend $400 million to redesign the GM's engine plant in Tonawanda, N.Y., which will affect 710 jobs. A part of investment will be given to a plant in St. Catharines, Ontario.

GM paid back $6.7 billion of loans it took from federal government and $6.6 billion government money was provided to GM, which was set aside to be paid on the repayment of loans. The company had announced to create 9,100 jobs in 22 plants in United States and Canada.

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