Yet more good news for the US housing and construction industries as home building, prices and sales all trended upwards during 2012 according to a market report by the Royal Institution of Chartered Surveyors.
The institution has also predicted a rise of 5 percent in the value of homes in 2013 and believes that both new home and existing home sales will continue to trend upwards in 2013. Over the past year new home sales have risen 17 percent and home building is sitting at its highest level since the middle of 2008.
The report also highlights a 3 percent annual growth in home prices up to October 2012. This is significant as it is the first annual gain post recession. However, it is important to note that the recovery is highly fragmented with some cities seeing rising prices whilst others continue to see declines.
Phoenix, which was one of the cities hardest hit by the recession, has recorded 20 percent gains, while cities that saw less extreme price declines such as New York and Chicago are, as yet struggling to record any significant price growth.
“We are cautiously optimistic about the state of the housing market. Indeed, encouraging signs are emerging such as rising home values, construction activity and sales. Demand is being supported by sustained, albeit modest, job growth and record affordability, and reflects increasing consumer confidence and household spending,” the report says.
There are, however, still headwinds that the housing market in the US must overcome the report adds. Home values are still almost a third lower than their pre-recession peak. The number of households whose mortgage is greater in value than their home now stands at 10.8 million, while home sales, existing and new, remain 30 percent and 70 percent below their pre-recession peaks respectively.
Other downsides include weak credit growth and the fragile labour market, which are the largest obstacles to a sustainable recovery. “Although the housing market has ploughed along in spite of the weak macro environment, this can only be sustained for so long without support from stronger job growth and improved lending conditions,” the report adds.
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