June 25 - The housing market continues to build momentum with home sales and prices hitting multi-year highs, but with rising rates the pace could cool. Bobbi Rebell reports.
The housing market is on a roll- racking up records as it continues to build momentum. New data show home prices in 20 cities jumped 12 percent from a year ago. That's the biggest annual rise since March of 2006- before the housing bubble burst. And a separate report shows sales up more than 2 percent in May- near a five-year high... and up 29 percent compared to last May. But the data was collected before the recent rate jump- warns Trulia's Chief Economist Jed Kolko: SOUNDBITE: JED KOLKO, CHIEF ECONOMIST, TRULIA (ENGLISH) SAYING: "Rising mortgage rates will help cool down price increases. That's because as rates rise, housing gets less affordable and a given mortgage payment can't support as much house." Kolko also points out that a lot of the housing demand has been from investors. SOUNDBITE: JED KOLKO, CHIEF ECONOMIST, TRULIA (ENGLISH) SAYING: "We are seeing investor activity start to ease off. That is because there aren't as many bargains for investors to buy as there were a year ago. So, investors aren't competing quite as hard for homes on the market." But the improving home market continues to boost the overall economy- making consumers more confident and less fearful about spending on big ticket items. S&P Dow Jones Indices David Blitzer: SOUNDBITE: DAVID BLITZER, CHAIRMAN, S&P DOW JONES INDICES (ENGLISH) SAYING: "Rising housing prices have increased wealth. More people own houses in this country than own stocks, and home prices go up- people are richer, and they feel richer. " Builders are also benefitting: Tuesday Lennar reported revenue jumped a stronger than expected 53 percent last quarter.