A stable housing market signals a healthy economy, and according to statistics from the S&P/Case-Shiller home pricing index and the National Association of Realtors, that market will remain stable through the end of the year.
The home pricing growth trend continued in June, although at a slower pace than it had it May; S&P/ Case-Shiller announced that home prices increased 12.2% in the month of June.
The National Association of Realtors reports that pending home sales in July declined, although they are still higher than they were a year ago, continuing the highest surge in sales in the last 6 1/2 years.
40% of housing sales occur from April – July so economists are especially keen on culling statistics relative to the housing market during this third of the year to stay abreast of future trends not only in the housing industry, but in the economy as a whole.
According to analysts, the decline in the home pricing growth rate and in the number of July pending sales is a direct result of higher mortgage interest rates. Currently, mortgage interest is 4.8%, a full percentage point higher than reported in May.
The decreases are not necessarily bad news. Neither is the mortgage rate increase; according to the National Association of Realtors, the tremendous growth in the housing market was too abrupt and too steep; the spike was unsustainable over time. The decreases are simply the result of a leveling of the housing market.
Other good news on the economic home front: consumer confidence also a predictor of economic trends, remains high, even though it dipped slightly during the month of August. Consumers’ assurance in their economic futures is critical, as consumer spending accounts for 70% of economic activity. The more confident we are, the more we consumers consume.