Home Prices Increase at Slower Than Expected Pace

By Robert Davis
Oct 26 2010

Prices for existing homes in the US rose only 1.7 % in 20 US cities, far lower than the expected numbers.

This news comes just one day after demand for existing homes rose further than expected. Government officials have said that this is a sign that consumers are taking advantage of low home prices.

Economists from the US projected that the price of existing homes would rise by 2.1% over the past year. However, the 1.7% increase stands as the lowest year to year increase ever in the reporting history.

Further strain was put on the housing market when the $8000 federal income tax credit for new home buyers ended. During the early days of 2009 and 2010 prices and demand were up but the tax credit ended which put a stop to the upswing in housing purchases.

Stocks and bonds took a major hit today when the report on home prices was released. Securities traded on the market were low based on the market report. However, bonds were up slightly on the news of the housing market increase.

Mortgage companies all over the US have been tracking the current trends in home sales. With lenders opening their credit lines for the first time in two years, more consumers are seeking out new home loans. However, with the new home prices so low along with the low mortgage rates lenders are set to make only slight profits.

The White House has said that it expects the housing market to start rebounding after the first of the year.