For the third month in a row home prices rose in August, which surprised many economists with its rapid pace of recovery while still others have questioned how long these gains can last?
Home prices posted gains throughout the summer at an annual pace close to 7 percent after three-years of declines. As unemployment continues to rise and consumer confidence seems to fall, many analysts have been caught off guard by the gains in home prices particularly and especially at its rate of speed.
It's expected that home prices will continue to rise during the next few months, but it cannot be forecast much more beyond that.
Rising home prices are the main ingredient for the economy to rebuild. It's interesting to note that when homeowners feel wealthier as their property appreciates in value they are more likely to spend money.
Sadly, some economists feel that there will be a double dip in home prices even though the economy is showing signs of recovering because home prices may drop again as unemployment and foreclosures rise. However, now that the Senate has agreed to extend the federal tax credit for first-time homebuyers until June of next year and are planning to include an offer to returning buyers, there may be better days ahead.
Home prices have risen month after month since June, 15 metropolitan areas posted gains with San Diego, San Francisco and Minneapolis leading the way. Despite the fact that home prices are still down 30 percent from their peak in 2006, the rebound seems to be widespread.
Continued evidence that a recovery is occurring, September's home sales figures have backed up this claim particularly since resale home sales rose more than 9 percent which was the largest gain over the past 26 years.