It’s the most personal barometer of the housing market: home values.
After peaking during the boom in the summer of 2006, U.S. home prices tumbled 35 percent through January 2012, falling back down to 2002 levels. But an improving job market, rising home sales, a decline in the supply of available homes and a slowdown in foreclosures this year have combined to fuel a housing market recovery that has driven home prices upward.
The Standard & Poor’s/Case-Shiller national home price index for October shows home prices rose 4.3 percent from the same month a year earlier. October marked the fifth straight month of year-over-year gains, after nearly two years of declines. Even so, home values are about 30 percent below their peak.
The metropolitan areas with the biggest home price gains this year generally had sharp price declines during the housing bust, says Jed Kolko, chief economist for real estate website Trulia.com. But he says many of those markets are now enjoying solid job growth and a tighter supply of homes on the market.
Even so, big price gains aren’t necessarily a sign that a market is fundamentally sound.
“Many big price gainers, like Phoenix, Detroit and Las Vegas, still have slow job growth, high vacancy rates or more foreclosures to come,” Kolko says.
Still, he and many other economists anticipate home prices will continue to rise into next year, barring a recession or similar economic shock.Associated Press