Although most cities in the U.S. have watched housing prices rise recently, there is some contradiction in the economy. For one thing, although the prices have risen, consumer confidence, which was already low, dropped some more. Turning to the good news, note that there have been home sales.
The home prices, which dropped for the last five years straight, are going up slowly but surely. According to Standard & Poor, the index fell 1.9 percent for the last year ending in April. That was more than economists expected. It is now rising slowly. Conversely, confidence among consumers, dropped. The year 1985, which was a thriving year, consumer confidence was 100. It is now 62.0 when measured against that scale.
Housing sales gained speed in April. Economists theorize that it was due to federal statistics not taking foreclosures and what are called short sales into account. A short sale is one in which the homeowner owes more to the mortgage company or bank than he can sell the property for. It is, however, preferable to going into foreclosure in most cases.
One group of experts alleges that home prices will drop 0.4 percent in 2012. They based their forecast on the thought that the housing market had leveled off. Their negativity takes into account rates of construction starts, foreclosure rates and sales of existing homes.
The alleged lack of confidence on the part of consumers will lead to fewer purchases being made of all goods. Spending will be slow in the near future. Although there will be peaks and valleys, the fact remains that we are in recovery.
One area that is plagued by dropping home prices is Atlanta, Georgia. They have gone down 17 percent over the last twelve months. On the positive side, in Phoenix, Arizona, they rose 8.6 percent in that same length of time.
Builders are putting up more new homes as evidenced by the increased number of building permits being applied for. The volume of permits is for apartments as well as single-family homes, however.
The housing market does not seem to correlate with the job market at this time. Only about 73,000 jobs per month have been added in April and May. Economists warn that this slow growth does not bode well for continuing improvement in the housing industry.