US Home Prices See Biggest Gain in 7 Years
June 25,2013
A new report confirms U.S. home prices are on the rise. Of 20 major cities in the Standard & Poor’s/Case Schiller home price index - 12 posted double digit gains in April, compared to last year. Industry experts say prices will continue to rise due to smaller inventories but some say tight lending standards and rising interest rates could put a damper on the housing recovery.
U.S. home prices are up more than 12 percent since last year.
That bodes well for the world’s largest economy and could help offset the drag from higher taxes and government spending cuts.
Lawrence Yun is the chief economist for the National Association of Realtors.
“When home values rise, this is good news for the economy because for many homeowners, they feel wealthier, they feel more comfortable going out and spending money," said Yun.
Home prices are rising because there are fewer homes to buy. But despite historically low interest rates, Yun says construction of new homes has not kept pace.
“Construction loan availability is very difficult at the moment so the homebuilders who are in the market are relying not on construction loans but are going to Wall Street and issuing bonds, issuing stocks, so these are big homebuilders, publicly listed companies who can tap Wall Street funds - who are able to build. But many of the smaller builders are shut out of the market and they are unable to enter," he said.
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