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US house prices show strong gains | US house prices show strong gains |
(35 minutes later) | |
US house prices are continuing to show strong growth according to a closely watched survey. | US house prices are continuing to show strong growth according to a closely watched survey. |
The S&P/Case-Shiller Home Price Index showed that prices rose 12.4% over the 12 months to the end of July. | The S&P/Case-Shiller Home Price Index showed that prices rose 12.4% over the 12 months to the end of July. |
The index measures single-family home prices across 20 cities, with 13 cities showing a rising annual growth rate. | The index measures single-family home prices across 20 cities, with 13 cities showing a rising annual growth rate. |
Last week, the US Federal Reserve decided to maintain its effort to boost the economy, which involves buying $85bn worth of assets every month. | Last week, the US Federal Reserve decided to maintain its effort to boost the economy, which involves buying $85bn worth of assets every month. |
That scheme, known as quantitative easing (QE), is credited with boosting the housing market last year by driving down mortgage rates to record lows. | That scheme, known as quantitative easing (QE), is credited with boosting the housing market last year by driving down mortgage rates to record lows. |
However, David Blitzer from S&P Dow Jones Indices said that effect has worn off. | However, David Blitzer from S&P Dow Jones Indices said that effect has worn off. |
"Following the increase in mortgage rates beginning last May, applications for mortgages have dropped, suggesting that rising interest rates are affecting housing. | "Following the increase in mortgage rates beginning last May, applications for mortgages have dropped, suggesting that rising interest rates are affecting housing. |
"The Fed's announcement last week that QE3 bond buying will continue for the time being may have only a limited, though favourable, impact on housing." he said. | "The Fed's announcement last week that QE3 bond buying will continue for the time being may have only a limited, though favourable, impact on housing." he said. |
Las Vegas saw the biggest annual gain of 27.5%, while San Francisco, Los Angeles and San Diego all saw gains of more than 20%. | |
But the survey points out that house prices in those cities are still well below the peaks hit before the 2008 financial crisis. | |
Of the 20 cities surveyed, New York saw the lowest annual increase of 3.5%. | |
Detroit, which filed for bankruptcy in July, saw an annual growth rate of 16.9%. However, the report says that Detroit is the only city where house prices are still below the levels reached in January 2000. |