Is Housing Recovery on a Roll?

The housing recovery may be continuing its push forward as home prices around the country have gone up once again. Certain parts of the recovery may even be driving other areas of the recovery and the economy as a whole.

Home prices did not increase in all parts of the United States, but they certainly did in most regions. Only 3 states failed to report increased home prices: Delaware, Alabama, and Illinois. In addition, of the 100 largest metropolitan areas in the U.S., only 4 failed to report increases.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

The Western U.S. lead the gains, reporting the highest numbers. Nevada saw home prices jump 19.3 percent year-on-year in February, Arizona rose 18.6 percent, California hit 15.3 percent, and Hawaii reached 14.6 percent, while Idaho trailing the group with a 13.5 percent increase. Phoenix, Los Angeles, Riverside, California, Atlanta, and New York lead the metropolitan-area gains.

The national gains were evident on both a year-on-year and month-on-month basis, and they were also the twelfth consecutive month of home prices, beating their year-earlier counterparts. This shows steady momentum for the housing recovery…

The national average rise in home prices in February was 10.2 percent from the year-ago period,  making it the largest such gain in 7 years — though prices were still down 26 percent from where they stood at their peak in April 2006. Home prices were up 0.5 percent from January, even though winter is usually a season when sales are usually slower.

Not everything was quite so positive though. Home sales to first-time buyers were still at unhealthily low levels, although this negativity was perhaps countered by the bigger increase in the sales of previously owned homes, which reached its highest level in over 3 years. Available for-sale homes were also low, and may have been a contributing factor in the increase in home prices: simply supply and demand pricing.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Despite still being low, the actual supply of for-sale homes did rise for the first time in 10 months in February.

The effects of increasing home prices could spread throughout the rest of the economy, as homeowners may feel more comfortable and wealthier with their home as an asset, and that may drive them to increase spending. Considering that 70 percent of economic activity is driven by consumer spending, the butterfly effect of increasing house prices could surge through the economy if they keep rising.

The increasing prices could even affect the actual sales of homes, as many people who were on the fence before might try to quickly buy a home in anticipation of prices going up even further. And, their purchases could reduce the number available homes and actually be a cause for a further increase in home prices.

Here’s how the 3 major indices reacted to the news today:

Screen Shot 2013-04-03 at 8.44.30 PM

Don’t Miss: Will Mortgage Applications Keep the Housing Recovery Story Alive?