Single-family home prices rose in September for an sixth straight month in a further sign that the housing market is on the mend, a closely watched survey showed on Tuesday.
The 3.6% increase from a year earlier is the biggest percentage gain in more than two years in the third quarter, according to the closely followed S&P/Case-Shiller index:
This latest rise comes as the housing market has shown numerous other signs of recovery in recent months. The rebound is spurred by a combination of record low mortgage rates, an improving jobs market and a drop in foreclosures to a five-year low, reducing the supply of distressed homes available. There is also a tighter supply of both new and previously owned homes on the market.
Dean Baker, the co-director of the Center for Economic and Policy Research who was one of the earliest economists to warn about the housing bubble and the trouble that lay ahead, said this recovery in the housing market should lead to some sustained housing price increases in the coming years.
"I've been an optimist as of late," he said. "Some think it'll get back to bubble prices and that's crazy. But we'll probably do better than inflation for the next few years, and people who have been underwater on their mortgage will get out from that, and build some equity."
"With six months of consistently rising home prices, it is safe to say that we are now in the midst of a recovery in the housing market," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.