Can the housing rebound pull US consumers out of the doldrums?

ON NORTH AMERICA

The housing market recovery is continuing apace with the Case-Shiller home price index up 11% over the past year. Encouragingly those that were hardest hit have benefited the most with cities like Las Vegas seeing 21% increases and Phoenix up over 25% in the past year.

This is going a long way to repair household balance sheets. It is not just important for consumer confidence, but it can have a tangible effect on a household’s income statement. As house prices rise those owners who are under water on their mortgages, or were left with small equity holdings in their home, suddenly have a larger equity stake which allows them to refinance at lower rates. 30-year fixed rate mortgages are available at 3.7%, and many have already refinanced at these low rates. However 40% of households have not been able to because of their low equity stakes and those t...