More positive real estate news on SouthStar Communities blog: Home prices surged during the first quarter at their fastest pace in nearly seven years, the latest sign of a sustained warm-up in an economic recovery that has otherwise been marked by starts and stops.
Home prices in March rose by 10.9% from a year earlier, the largest such gain in nearly seven years, according to the S&P/Case-Shiller an index tracking home prices in 20 U.S. cities.
The housing-market revival—and an accompanying report on consumer confidence—adds new grist for a debate inside the Federal Reserve about how far to push its easy-money policies, including an $85 billion-a-month bond-buying program which has helped to keep mortgage rates near historic lows, boosted asset prices and begun to stimulate hiring and spending.
Fed officials say they have been considering when to wind down the program. Signs of a stronger housing market could give confidence to officials who want to be sure that the economy can stand on its own, without the bond buying. Still, they have been reluctant to get too enthusiastic about signs of an upturn, in part because the economy has disappointed before.
The latest reports were big factors driving financial markets Tuesday. Stock investors, encouraged by the strong data, sent the Dow Jones Industrial Average to a new high. At the same time, yields on the benchmark 10-year Treasury note climbed to 2.132%, the highest level in 13 months. Bond yields rise as prices fall, and the gain could have been a response to strong data—and also the prospect of a less active Fed.
The market reaction reflected rising optimism that the U.S. economy has shaken off a potential spring slowdown and is on track for steady gains. Home prices in March rose 10.2% from a year earlier, the largest annual gain since prices began to fall in 2006, according to the Standard & Poor's/Case-Shiller national index released Tuesday. Prices increased 1.2% in the first quarter, the first increase for the typically slower winter period since 2006. In a separate report, the Conference Board, a private research group, said Tuesday that its index of consumer confidence in May increased to the highest level since February 2008.
Read more from the source: WSJ.com
For more trending news on the housing market and the economy, visit our real estate news blog.