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Should Home Prices Rise Over Time?

By Morgan Housel - Apr 15, 2013 at 7:46PM

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Dissecting most Americans' largest asset.

Nationwide home prices are up 8% over the last year, according to the Case-Shiller housing index.

This isn't surprising. The supply of existing homes for sale is at a seven-year low. Construction of new homes is still well below the rate of household formation. Prices will almost always rise in that situation. It's simple supply and demand. And it's pulled millions of homeowners out from being underwater on their mortgage and brought new hope to the housing industry, boosting shares of D.R. Horton (DHI -6.74%) and NVR (NVR -5.31%) as the outlook for construction rises. 

That's the good news. But what should homeowners expect the price of their house to do over time?

In this video, Fool analysts Morgan Housel and Matt Koppenheffer tackle that question.

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Stocks Mentioned

D.R. Horton, Inc. Stock Quote
D.R. Horton, Inc.
$65.71 (-6.74%) $-4.75
NVR, Inc. Stock Quote
NVR, Inc.
$4,136.52 (-5.31%) $-231.87

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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