A Road to Recovery: Home Prices Soldier On
An October 30 S&P/Case-Shiller Home Price Indices press release suggests that the housing market is continuing its long, slow path to recovery. The 10- and 20-City Composites increased by 0.9 percent in August compared to July, marking the seventh straight month of increases.
“The sustained good news in home prices over the past five months makes us optimistic for continued recovery in the housing market,” said chairman of the Index, David Blitzer, in the press release. “News on home prices confirms other good news about housing.”
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That good news includes a 43 percent increase in the pace of single family housing starts compared to last year, an increase in new home sales, a drop in inventory, and a decline in mortgage default rates. Seattle was the only city where prices declined for the month, down 0.1 percent.
The 10-City Composite recorded an annual return of 1.3 percent, up 0.6 percent from the rate posted for July. The 20-City Composite recorded an annual return of 2 percent, in increase of 1.2 percent over the rate for the same period.
Hard-hit areas like Phoenix, Arizona, continue to post double-digit increases in annual rates, climbing 18.8 percent in August. Only three cities posted negative annual returns for the month: Atlanta at -6.1 percent, New York at -2.3 percent, and Chicago at -1.6 percent.
In an interview with Bloomberg Businessweek, Joe Feldman of Telsey Advisory Group said: “Historically, there’s about a six to nine month lag between home sales and when the consumers come back to the retailers to actually fill up the house with new things.”
With seven months of increases under the country’s belt, companies like Home Depot (NYSE:HD), Williams-Sonoma (NYSE:WSM), Pier 1 Imports (NYSE:PIR), and Ethan Allen (NYSE:ETH) could start seeing greater returns.