After experiencing a continuous drop down for 6 consecutive years since 2005, the US housing market has finally acquired pace, with the home prices acquiring extreme heights in last two years. Huge signs of economic recovery are seen with this dynamic rise. Standard & Poor's Case-Shiller Home Price Index, a 20 city composite index, rose by 1.6% from June to July 2012 with 1.2% from July last year. Apart from this growth, the index followed rise in the prior 3 months as well. The prices in the Chicago area which rose by 2.7% in July, better than the 1.6% national gain. Summer was a good real estate selling season in United States' housing market which resulted into such growth.
Investments in real estate contribute to around 2.4% to the country's GDP (Gross Domestic Product) while it was 6.3% in 2005 and having historical average of 4.5%. This was the worst case with housing market of the country resulting into dropping of indices since 2005. Housing prices peaked in the year 2006 but drastically fell in later 2006 and 2007 which further experienced the lowest level in 2012. The Cash-Shiller Home Price Index reported its biggest price drop in 2008 which was notable in the history of housing indices. This critical condition is called as United States housing bubble which is an economic condition affecting major part of the United States.
Recently, National Association of Realtors and Commerce Department reports portrayed the rise in housing construction and existing home sales. Reportedly, the estimations were true and the home prices seem to be rising making home builders earn fairly, due to demand for new homes. Fundamentally the demands are noticed because of the rent rises making people focus on buying real estate. Though other major economic sectors of the nation proved to be dull, the housing sector pounced up this year giving agility to the sector. These rising prices will surely help the people who have mortgage values more than their homes.
Despite, there are chances of home prices declining even more in the coming future, according to experts. This will result into an uneven recovery in the housing market where fluctuations would be recorded periodically. The nation's government has estimated to provide mortgage loans through Fannie Mae and Freddie Mac along with the US Federal Reserve keeping the mortgage rates to a moderate level.
