House prices in the US saw the biggest rise in nearly seven years in March 2013, according to a new survey. The S&P/Case-Shiller index found prices rose by 10.9% from the same period in 2012, suggesting that the economic recovery is now well underway.
The 20 US cities included in the latest Standard and Poor’s (S&P)/Case-Shiller index all showed annual gains for the third straight month. House prices are taken as indicative of consumer confidence and the uptick in prices can be expected to feed back into increased consumer spending, further contributing to the US recovery from the slump induced by the 2008 financial crisis.
Separate official data showing US consumer confidence rose to its highest level in more than five years in May 2013, further supports the rosy economic outlook.
The release of the reports have already boosted investor confidence, with the Dow Jones industrial average closing up 0.7% at 15,409 yesterday, another record high. The continuation of the loose monetary policy and of quantitative easing (QE) by the Fed has also been instrumental in the present high stock prices.
As a slight warning again getting too over-optimistic, however, the S&P Case-Shiller house price increases could be artificially enhanced by a limited supply of new homes coming onto the market, warned the survey organisers. Nonetheless, healthy employment figures in the US combined with extremely low mortgage rates will no doubt continue to provide a boost.
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