Home prices up, consumers’ confidence down

Home prices up, consumers’ confidence down

The U.S. housing market is recovering, even if at a sluggish pace

The latest data on the US real estate market trend released by Reuters show that the housing market is recovering, as home prices rose in April for the third month in a row. Despite this, consumer confidence appears to have fallen to its lowest level in June due to the increased expectations Americans have on the economy.

The 2006 housing market’s collapse made prices plummet by 30% and after having hit the bottom, the sector is unmistakably starting to recover thanks to leaner inventories and record-low mortgage rates.

There is a great amount of foreclosures, credit restrictions and weak demand to face in order to achieve full recovery, but experts are optimistic and say that an important step towards a normal-looking housing market has been made, even if this will be a multi-year recovery process.

The housing market in the United States is slowly stabilising, but the broader economy is still facing the problems caused by the sluggish labour market and the fears over the fallout of Europe’s debt crisis; therefore, consumers’ assessment of their current situation has improved, but they do not feel the same as positive about business conditions and employment for the next six months. The Organization for Economic Cooperation and Development warned about the dangerous impact of long-term joblessness saying it might leave a lasting scar of higher unemployment on the U.S. economy. The growth of economy during the housing boom was driven by consumer spending that currently accounts for 70% of economic activity in the U.S.

Analysts say there is a 20% risk of a new recession, but the baseline forecast made by rating agencies is that the economic recovery will continue in the coming months, even if at a slower pace than the 1.9% rate reported in the first quarter of the year.

Read also:

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·         Alternative investment options to be a homeowner despite the credit squeeze

·         The wealth report reveals top investment destinations for 2012

·         Buying a home in a European capital affected by the crisis

·         Rich American families are facing foreclosures

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