It’s been a long, hard road the past four years for homeowners facing foreclosure or drowning in an underwater mortgage, but there’s been more evidence lately that the flood is finally starting to recede.
With news last month that the number of underwater homes fell from 12.1 million to 11.4 million during the first quarter of 2012, CoreLogic released another report today that found home prices nationwide, including sales of foreclosed homes, increased by 2.5 percent year-over-year, and were up 1.3 percent between May and June of this year.
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Home prices are rising or stable in 73 out of 100 large metro areas, according to the report, with Arizona and Idaho showing the greatest gains. Construction of new homes has also started to come back. Housing starts in June were the highest since 2008.
Many credit the improving market to investors who have been buying up the backlog of distressed homes, or “shadow” inventory. “The decline in shadow inventory translates to fewer distressed sales, which helps sustain price appreciation,” writes Mark Fleming, a chief economist for CoreLogic, in a press release.
The uptick in the housing market could be just what the sluggish economic recovery needs. According to a July 27 Commerce Department report, of the 1.5 percent year-over-year growth in GDP in the second quarter of 2012, housing contributed 0.2 percentage points.
The turnaround could do even more to boost the economy once related industries like furniture, home improvements, and landscaping start seeing the benefits of a stronger housing market. “At the halfway point, 2012 is increasingly looking like the year that the residential housing market may have turned the corner,” writes CoreLogic’s president and CEO Anand Nallathambi in the press release.