Property prices in the US more than expected

Prices of homes in the US climbed more in the year to July 2012 than forecast, providing more evidence that the country’s housing market is starting to recover.

The S&P/Case-Shiller index of property values in 20 major cities increased by 1.2 per cent between July 2011 and July 2012, the biggest 12 month rise since August 2010. The median forecast of 23 economists surveyed by news service Bloomberg was for a 1.1 per cent gain. Keep reading to find out more about the US recovering property market.

US property prices rise by 1.2 per cent in year to July 2012
The rise in property prices has been attributed to the fact that mortgage rates are now at their lowest levels on record. Buyers are being attracted by low rates which are helping absorb the supply of distressed properties that had depressed values.

The average rate on a 30 year fixed mortgage in the US fell to 3.49 per cent in the week ended 20th September according to figures from Freddie Mac.

Millan Mulraine, senior U.S. strategist for TD Securities in New York, said: “We’re finally seeing a more sustained and broad-based improvement in home prices. The housing sector has made an important turn here, and that is being sustained.”

The Case-Shiller index is based on a three-month average, which means the July data were influenced by transactions in May and June. The 20-city index accelerated after showing a 0.6 per cent rise in values in the year ended June 2012.

“All in all, we are more optimistic about housing,” David Blitzer, chairman of the S&P index committee, said in a statement. “Stronger housing numbers are a positive factor for other measures including consumer confidence.”

Sixteen of the 20 cities featured in the index showed a year on year gain, led by a 17 per cent increase in Phoenix.

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