The United States housing market is finely balanced, and the old adage “lies, damn lies and statistics” applies very well to its current situation. In nominal terms, property prices rose 1.9 per cent in the third quarter of 2009, the first rise in several years, but, when inflation is factored in, they fell 0.5 per cent over that period. So, which way from here?
The government's tax credit scheme for home buyers and the drop in mortgage rates to below 5 per cent mean prices will continue to rise says consultancy, Capital Economics. With home sales at a two and a half year high and 35 per cent above January 2009's trough, some fret that another bubble is forming, but the consultancy is sanguine, pointing out that sales levels remain well below their long term average.
Backing up the housing recovery has been a bounce-back in the economy. After its longest recession since the 1930s, GDP grew 2.8 per in the third quarter of 2009.
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