Home prices see biggest annual gain in seven years in April: S&P

[Zorro]

Source: Reuters

Single-family home prices jumped in April, racking up their biggest annual gain in seven years in a sign of growing momentum in the housing recovery, a closely watched survey showed on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 1.7 percent on a seasonally adjusted basis, topping forecasts for 1.2 percent.

Prices in the 20 cities accelerated by 12.1 percent year over year, which was also above expectations and the biggest annual gain since March 2006.

"The recovery is definitely broad based," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.

Read more: http://finance.yahoo.com/news/home-prices-see-biggest-annual-130226127.html

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Good news on the real estate front.

[wercal]

1. I work in land development

Homes are selling well right now, because there is an underlying fear that interest rates will go up. So there is definitely a 'buy now' mentality.

So we have this strange situation where strong home sales could be seen as an indicator of a strengthening economy...and the fed could increase the interest rate by an 1/8th point to prevent inflation...causing an absolute run on housing...and perhaps another interest rate increase...and then an abrupt halt in sales, due to the higher rate (and the notion that it could go back down again).

Because of this, my clients (and the banks that lend to them) are building new houses in a very slow and methodical way. They don't want to get stuck with any inventory....and scarcity just gets them higher prices.

So, I wouldn't look for a building boom and development bonanza (which is actually a good thing). And, for the foreseeable future, housing will be an indicator of the economy, but not the primary driver.

[PSPS]

2. Sounds bubblicous!

When housing prices rise faster than wages, we're in bubble territory. Are they offering no-down loans again? No-doc loans?

[Douglas Carpenter]

3. this is the great economic quandary - a "recovering" economy requires ever increasing burdensome

and out-of-reach for many housing costs