The Wall Street Journal reports that home prices are rising at the fastest rate since the beginning of the housing crash. One data firm found house prices rising by 6 percent in the last quarter alone. Freddie Mac’s estimates are lower, at 4.8 percent, but this is still the fastest single-quarter increase since 2005. On top of this, Fannie and Freddie look set to post some of their first profits in years—another sign that the market for mortgages is thawing:
Rising home values helped lift Freddie to a $3 billion profit, its best showing since the mortgage-finance company was taken over by the U.S. government four years ago. Freddie’s larger sibling, Fannie Mae, which hasn’t yet reported second-quarter earnings, posted a $2.7 billion gain for the first quarter.The main force behind the home-price gains appears to be a shortage of homes for sale. The number of properties on the market is down sharply from a year ago. Meanwhile, demand is up, as mortgage rates have dropped to their lowest levels in at least 60 years.
Part of the increase comes from banks processing foreclosed homes more slowly, decreasing the supply of homes for sale. But it’s always a good sign when Americans feel confident enough to spend more money on housing after a major crash. And because many families have made significant investments in their homes, a rising market means rising wealth for Americans as a whole.