The real estate market may have finally turned around, going by Standard & Poor's/Case-Shiller index for the 20 largest cities in the U.S.
The data showed that for the first time since 2010, the annual growth rate is positive, with the index mapping a 0.5 percent growth from June 2011.
In a one-month period, from May to June, all 20 cities surveyed saw an average price rise by at least one percent. Detroit recorded the maximum increase with a six percent rise while Charlotte saw the least with just one percent increase.
In terms of annual rates of change, Phoenix had the highest, up 13.9 percent, and Atlanta the lowest, down 12.1 percent, compared to the same time last year.
“We seem to be witnessing exactly what we needed for a sustained recovery; monthly increases coupled with improving annual rates of change,” David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices, said in a statement. “The market may have finally turned around.”
A price rise was also recorded in areas that were the hardest hit during the housing downturn.
"The fact that some of the areas hardest hit during the housing downturn, such as Florida, Arizona, and California, have seen gains in recent months is a positive sign that the gradual improvement in housing conditions is becoming somewhat broader based," Michael Gapen, senior U.S. economist at Barclays Capital in New York told Reuters.
Reacting to the news of price rise, Mario Como of Realty Executive Select told the Detroit Free Press that demand was driving up the costs of new homes.
"The home price increase is a direct result of undersupply (of move-in ready homes) and over-demand. We have consistently as many as five, six, seven offers on certain properties," he said.
Meanwhile, the American Improving Markets Index released by the National Association of Home Builders (NAHB), too, projects a strong case for the housing sector’s revival. The index tracked housing markets throughout the country and found that most major metros showed signs of improving economic health.
“The fact that we continue to see a strong core of metros showing up on the improving list each month adds to the growing evidence that the emerging housing recovery has a solid foundation on which to build as housing returns to its traditional role of driving economic growth,” NAHB’s chief economist David Crowe said in a statement.
Low consumer confidence
Despite improving housing market leading the way to strengthening the economy, consumers’ confidence in the overall revival of the economy reached an all-time low in August since 2011.
With the fiscal cliff looming ahead due to increase in taxes and spending cuts that are set to begin in January, consumers are still wary of another recession, which would once again affect job prospects increasing the unemployment rate to 9.1 percent. However, a decision on how to avert tax increases and spending cuts is unlikely until after the election in November.
"The Consumer Confidence Index is now at its lowest level since late last year,” Lynn Franco, Director of Economic Indicators at The Conference Board said. “A more pessimistic outlook was the primary reason for this month's decline in confidence. Consumers were more apprehensive about business and employment prospects.”
According to the index, the percentage of consumers expecting business conditions to improve over the next six months declined to 16.5 percent from 19. percent. The number of people who expect the job market to improve also decreased to 15.4 percent from 17.6 percent.
However, those who believe their earnings would escalate jumped to 15.7 percent in August from 14.2 percent in July.