Dec 01 2010
US House Prices Still Declining
US house prices was declining again in September, and the rate of decline is faster than expected. The survey found that Cleveland recorded the largest decline in house prices, which fell by 3% from a month earlier. Washington and Las Vegas were the only metropolitan areas to experience gains in house prices. Despite the month-on-month fall, the index also showed that house prices were up 0.6% from the same point last year. And a separate monthly survey showed US confidence in the economy rose in November to its highest level in five months.
One of the most important reasons (perhaps also the biggest reason) for the economic recession is that the real-estate market collapsed, nobody could afford their houses anymore. However, as the house prices fall, consumers’ confidence rose up. As we can tell from the business article, the consumer confidence rose to its highest level in five months. It’s a simple price vs. demand chain: When the house prices fall, there will be more consumers willing and able to buy the houses. Thus, the economy can continue to function and hopefully it can get back on track. So I consider this a good sign.