There’s some good news for bank rate savers this week — and more bad news thanks to even lower certificate of deposit rates for the last week of August.
Hopefully, as investors turn the page to September, CD rates will stage a much-needed rally heading into the year’s last quarter.
The good news comes from the housing market, where the S&P/Case-Schiller Index recorded a 4.2% upward spike in U.S. housing prices from June 2009 to June 2010. Most economists expected the year-to-year housing number to clock in at 3.5%, so the news that housing prices outperformed analysts’ expectations should be treated as a positive development.
Housing has long been a prickly thorn in the economy’s side. Central bankers know that that consumers aren’t likely to start spending until one of their biggest sources of financial stability — their homes — start climbing in value again. Low housing prices are one big reason why the Federal Reserve has kept a lid on interest rates, which are near 0% these days.
While the jump in housing prices certainly has to do with the new homeowner’s tax credit which expired in July, there’s been more stabilization in the housing market, and that could drive higher bank rates. But that’s if — and a big if at that- housing prices continue to demonstrate growth going forward.
Even after the tax credit expired, home prices continued to rise, Case-Schiller concludes. The index pegs U.S. home prices as having increased 3.6% in the second quarter from the same quarter in 2009, and housing prices were up 2.3% from the previous three months of 2010.