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Data released last week that span a 12-month period ending Nov. 30 showed that prices rose 4.5 percent on the 10-city index and 5.5 percent on the 20-city index. Some of the hardest-hit cities in the country are rebounding, with Phoenix leading the nation with prices rising 22.8 percent, Las Vegas at 10 percent and Miami at 9.9 percent.
The creator of the indexes, Yale University economist Robert Shiller, isn’t ready to declare victory for the housing sector. Interviewed on Jan. 24 by Bloomberg Television at the World Economic Forum in Davos, Switzerland, Shiller said there’s still much uncertainty ahead.
“The short-term indicators are up now; it definitely looks better, but we saw that in 2009,” he said, referring to a period where home buyer tax credits helped spur sales, but home buying faded when the tax credits were removed.
In the hard-hit cities, today’s rising prices reflect the fact that distress sales are now a smaller percentage of total sales. But in more stable areas, the higher prices partly reflect a shrinking inventory of homes for sale. This is because many homeowners who’d like to sell their homes still owe more than they’re worth, and thus keep them off the market.
The National Association of Realtors reports that December 2012 inventory was almost 22 percent below December 2011. With fewer homes on the market, some areas are experiencing bidding wars.
The tight inventories are likely to translate into higher prices for homes in 2013. By historical standards, buying a home will still be cheap — just not as cheap as in 2011 and 2012.