US house prices see biggest rise in seven years
House prices in the United States increased by 12.1% year-on-year in April, its biggest single month climb in seven years. The results below expectations out of the water as the Standard and Poor’s data, which is compiled from the results of 20 cities across the United States, renewed optimism that the US economy could be on its way out of recession.
The index also showed an increase of 2.5% month on month, the San Francisco being one of the top performers. A home in the Bay Area will cost you an average of 20% more this year than it would have done in 2012. The only city to see a fall in house prices over the last year was Detroit, which is famed for its association with car production and crime.
Just last week the Federal Reserve announced that it may begin tapering its $85 billion a month monetary stimulus package, which sent shockwaves through the financial world and raised fresh concerns that the US housing market may begin to see a slowdown in its recovery. David Blitzer, the chairman of the Standard and Poor’s house Price index, said “last week’s comments from the Fed and the resulting sharp increase in Treasury deal sparked fears of rising mortgage rates will damage the housing rebound, (however) given this, the recovery should continue.”
Investors will currently be wondering whether this latest rise in housing prices will add to the Federal Reserve’s case for reducing the amount that it pumps into the US economy on a monthly basis.