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US Property Prices Reach 7 Year High

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CoreLogic  Anand Nallathambi  National Association of Home Builders  Wells Fargo  Rick Judson  US Construction Industry 

US Property Prices Reach 7 Year High

By - Friday 05 July 2013

Property prices are on the up in the US, reaching a seven year high in May. The latest  CoreLogic report showed prices increased by 2.6 per cent during the penultimate month of Q2 - an 11.6 per cent rise year-on-year. This is the greatest annual increase since February 2006 and the good times don't look set to come to an end anytime soon either. According to CoreLogic, the summer looks set to be a good one for the property market, as the recovery continues.

The strong performance is largely down to tight inventory supply, which is pushing prices higher. However, luckily for those considering property investment in the US, prices are still cheap nationally compared to during the housing boom. Yet, if conditions keep improving, this probably won't last long.

Anand Nallathambi, CoreLogic's chief executive officer, said: "Across the country, pent up demand and continued low interest rates are fuelling strong demand for a limited inventory of properties. We expect that trend to continue to drive up prices throughout the balance of the summer months."

Nevertheless, CoreLogic is aware that for a sustainable recovery to occur, moderation is the key. Skyrocketing price rises are no longer the name of the game and property markets over the world will be fearing boom and bust. Luckily for the US, the sector is progressing as hoped.

California, Arizona, Hawaii and Oregon have experienced the greatest price increases so far, with forecasters expecting a further rise of 2.9 per cent to be recorded in June. This will create a yearly gain of 13.2 per cent. The west, south, midwest and northeast will see total 2013 gains of 10.1 per cent, 5.2 per cent, 4.6 per cent and 4.1 per cent respectively.

Things are also looking up in the US construction industry, with figures from the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index showing confidence in newly-built single-family homes surged eight points to read 52 for June. Rick Judson, NAHB chairman, said: "This is the first time the HMI has been above 50 since April 2006, and surpassing this important benchmark reflects the fact that builders are seeing better market conditions."

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