Home prices have been on the rise for much of the past year, which has helped U.S. households gain more buying power.
As Americans begin to see better personal financial situations, spending could increase, potentially leading to more retail sales. With product coming off the shelves, small- to medium-sized businesses might run into the need to replenish stock, which is where inventory financing can come in handy.
CoreLogic's Home Price Index revealed a 2.6 percent increase when compared to April and 12.2 percent year-over-year improvement. This was the largest annual jump in more than seven years and the 15th straight monthly gain.
"It's been more than seven years since the housing market last experienced the increases that we saw in May, with indications that the summer months will continue to see significant gains," said Mark Fleming, chief economist for CoreLogic. "As we approach the half-way point of 2013, home prices continue to respond positively to the reductions in home inventory thus far."
June looks as though it will be a positive month for home prices as well, with the Pending HPI projecting a 13.2 percent year-over-year increase and a 2.9 percent month-to-month improvement.
Jonathan Miller, president of Miller Samuel, told Bloomberg that home price appreciation is expected "for the foreseeable future," as there continues to be a lack of supply in the housing market.
If rising home prices translate into higher retail sales levels, small- to medium-sized businesses might need to rely on inventory financing to ensure that shelves remain full. This type of asset-based lending allows retailers to use current product as collateral to obtain a revolving line of credit, which, in turn, can be utilized to purchase additional inventory.