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Higher rates- and yet still higher prices.
Despite the recent jump in mortgage rates, a 30-year loan now averages 4.75 percent, prices for U.S. single family homes rose 12.4 percent year over year according to the S&P/Case Shiller July index- that's the strongest in more than seven years!
But S&P's David Blitzer says too much of a good thing- is just not good.
SOUNDBITE: DAVID BLITZER, MANAGING DIRECTOR AND CHAIRMAN OF THE S&P INDEX COMMITTEE, S&P DOW JONES (ENGLISH) SAYING:
"This is not a number we'd want to see sustained over the next two or three years, because then we'd be talking about booms and bubbles, not about recovery. Right now, we are still talking about recovery. But buried in the data are a lot of hints that 12% is going to kind of ease down going forward. A year from now we will probably be someplace in single digits."
Homebuilders also continue to, well, build. Both Lennar and KB Home came out with strong quarterly results.
And both of them were able to raise prices- Lennar by 16 percent- KB Home by 22 percent.
But there is a growing concern that part of what is supporting higher prices in the overall housing market- is investors, and that could make the housing sector more vulnerable.
For example, hedge fund Oaktree Capital is looking to sell about 500 homes that are rented out.
But overall, while he is watching it closely Yale's Robert Shiller says, having investors in the housing sector, may not be all bad:
SOUNDBITE: ROBERT SHILLER, ECONOMICS PROFESSOR, YALE UNIVERSITY (ENGLISH) SAYING:
"In some places it's gotten very heavy, the volume of sales to these investors. So what does that mean? Does that mean we are in a bubble? One way of interpreting it is- ok, these people are investors, so they must be speculators. But maybe they are not speculators. Maybe they are reacting to the greater demand for rentals, and they are just doing a mundane job of converting owner occupied to rentals, and maybe it's not a sign of a bubble at all."
And maybe is a sign that even with higher mortgage rates, and despite the Fed's concerns, the housing market is continuing its recovery.