Home prices are expected to go up in February, continuing the upward trend.
Economists estimated that the Case-Shiller City-20 composite, to be released by S&P Dow Jones Indices on Tuesday, would grow by 9 percent for the year ending in February 2013, showing the biggest gain in prices since summer 2006.
Gradual improvement in the labor market, a drop in the unemployment rate in February and low mortgage rates — created good conditions for people to buy homes.
“If you are interested in buying a home and you have money to do so, there was never a better time in a history to do it,” said Brian Jones, a senior economist for Societe Generale.
The home sales report for February released by the National Association of Realtors showed a rise in sales to a seasonally adjusted rate of 4.98 million homes. This figure is the highest since November 2009.
New residential construction index for the same month gained 4.6 percent from the revised January rate and 33.8 percent from February 2012, according to U.S. Department of Housing and Urban Development.
Even with acceleration in home building, the U.S. home market remains short of inventory, mainly because of a low number of foreclosed homes for sale. And a strong demand for available properties fuels home prices and pushes them to pre-recession figures.
“People can feel confident that if they buy a home now, the value of the home is not going to fall,” Jones added.
The last Case-Shiller report showed a faster growth in home prices in all the biggest cities nationwide. With Phoenix, San Francisco and Los Angeles expected to stay in the leading positions, economists suggested possible changes in Atlanta and Tampa.
“There are a lot of low-priced homes and no investors’ activity,” said Mark Vitner, a managing director and an economist for Wells Fargo. “It is possible we will see some moves there.”
Vitner pointed out the slowdown in the economy. He forecasted home prices to reach their highest level, approximately 11 to 12 percent growth in the middle of the year, and then decelerate.
He noticed the slowing of the economy and predicted home prices would change their growth pace in the second half of the year.
“We will see smaller prices gains in a year-to-year comparison,” said Vitner. “The growth will slow down, but it will still stay in a positive territory.”