Housing Recovery Aides Obama

President Barack Obama is getting a boost from a damaged part of the U.S. economy that his policies have done little to repair.

A long-awaited housing recovery is helping lift consumer sentiment to its highest levels since the start of the financial crisis, just in time for the Nov. 6 election. Home prices are rising, sales of new homes are at a more than two-year high and housing starts are running at their fastest pace since 2008.

After five years of shrinkage, Americans’ real estate holdings have risen in value for two consecutive quarters and are worth $730 billion more than at the end of 2011, Federal Reserve data show. More than 1.3 million homeowners who were “underwater” on their mortgages — the owners owe more than their property is worth — have moved above the break-even point on their homes, according to CoreLogic of Santa Ana, California.

“People are beginning to buy into the idea that a real recovery in housing is under way; that has to affect confidence,” said Jim O’Sullivan, chief U.S. economist for High-Frequency Economics in Valhalla, New York. “The housing meltdown was so central to the crisis, even a modest recovery brings with it pretty powerful symbolism.”

Nationally, home prices have rebounded from their post- crash lows. The S&P/Case-Shiller 20-city index released this week rose 2 percent in August from a year earlier. A broader index by CoreLogic, a real estate information service, showed prices up 4.6 percent in August compared with a year earlier.

Bloomberg

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