According to the S&P/Case-Shiller Home Price Index the average price of a U.S. house rose slightly in August, up 0.2 percent.  That means the average price of a U.S. home is now $142,840.

On an inflation adjusted basis house prices have fallen 40 percent from their 2006 highs.

And here’s a city by city breakdown showing how much prices have fallen since the their peak:

 

Home prices, along with high unemployment, are two of the biggest drags on the U.S. economy at the moment.  If the U.S. economy is to see any meaningful improvement both of these problems need to be addressed.

A major issue for house prices are the current high levels supply. The chart below shows the monthly supply of homes in the U.S.  Currently it’s over six months which is historically high.

Until the supply of housing falls it’s unlikely that the home prices will see any significant increases.

 

 

 

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