By - Press Release
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The United States experienced another round of broad-based home price gains in March, reinforcing the housing recovery’s important role in driving economic growth.
All 20 cities tracked by the Standard & Poor’s Case-Shiller home price index posted year-over-year gains, as they have done for three consecutive months now. The 20-city composite index rose 10.9 percent over the last year. That is the biggest annual increase since April 2006. Several cities — Charlotte, N.C.; Los Angeles; Portland, Ore.; Seattle; and Tampa, Fla. — had their largest month-over-month gains in more than seven years.
Pierce County’s next roundup of home prices is expected to be released June 5. In April, median prices for the county rose by a double-digit margin, jumping 13 percent to $217,000 from $192,000 last April, the combined single-family residence and condo data showed from Northwest Multiple Listing Service.
Continued strength in the housing market is welcome news for the rest of the economy, particularly given federal government spending cuts that went into effect in March and the end of the payroll tax holiday in January. With home values rising, the construction industry has been more motivated to ramp up building and rehire workers.
Consumers also are feeling wealthier and so are more willing to spend money. Consumer confidence surged this month to its highest level in more than five years as optimism increased about the state of the economy and its prospects for the rest of the year, according to a closely watched private barometer released Tuesday.
The Conference Board’s Consumer Confidence Index jumped to 76.2 in May from the previous month’s upwardly revised reading of 69. The figure exceeded analyst expectations of a more modest increase.
The last time the index was this high was in February 2008, at the start of the Great Recession.
The index now has risen two straight months after plunging in March amid concerns about the effect of tax increases that kicked in at the start of the year as well as the federal budget cuts known as sequestration.
“Back-to-back monthly gains suggest that consumer confidence is on the mend and may be regaining the traction it lost due to the fiscal cliff, payroll-tax hike, and sequester,” said Lynn Franco, director of economic indicators at the Conference Board.
The positive effect of rising home values and the appreciating stock market is expected to offset “at least a third of the fiscal tightening,” said Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors.
“Five years after the start of the financial crisis in earnest, and four years and a week’s time from the beginning of the economic recovery, we’re finally starting to get more of a pickup, more of a reduction in caution in terms of consumers’ behaviors,” said John Ryding, chief economist at RDQ Economics. “It’s been a very drawn-out process, but you have to remember what we’ve been digging our way out of, and after all it’s a far less drawn-out process than what’s been taking place in Europe.”
The Dow Jones industrial average rose 106 points to close at another record Tuesday, bouncing back from a loss the week before. The Standard & Poor’s 500 index also gained. The S&P is on track for its seventh straight monthly increase, the longest winning streak since 2009.
“They say the stock market tends to lead the economy. Now we’re starting to see the improvement on the economic front, so there’s some justification for this rally,” said Ryan Detrick, a senior technical strategist at Schaeffer’s investment research.
The New York Times, the Los Angeles Times, The Associated Press and staff writer Rolf Boone contributed to this report.
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