The news at a glance

Housing: A major upswing in prices

Home prices are increasing at the highest rate in seven years, said Nick Timiraos in The Wall Street Journal. Prices jumped 9.3 percent in the 12 months through February “while mortgage-interest rates hovered near record lows,” according to an index that tracks home prices in 20 major cities. All 20 cities surveyed posted year-over-year increases, and in some cases even double-digit gains; in Phoenix, for example, prices are up 23 percent from a year ago. “Nobody that I’m aware of anticipated the kind of price growth that we’ve had,” said Budge Huskey, chief executive of Coldwell Banker. “It’s simple supply and demand.”

“Steady hiring and near-record low mortgage rates” are driving the demand, said Christopher S. Rugaber in the Associated Press. Also, “buyers have fewer homes to bid on” as bank foreclosures ebb and homeowners remain unable or unwilling to sell. Rising home values are often considered a harbinger of economic recovery because they encourage people to buy before prices rise further, entice buyers to sell, and encourage banks to provide mortgage loans. Higher home prices can also “increase homeowners’ wealth, which encourages more spending,” and create construction jobs as homebuilders work to keep up with demand.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Pharma: U.S. sues drug firm over kickbacks

The U.S. government has accused Swiss drug giant Novartis AG of ripping off Medicare and Medicaid by “paying multimillion-dollar kickbacks to doctors in exchange for prescribing its drugs,” said Jonathan Stempel in Reuters.com. The civil suit, filed last week in Manhattan’s federal district court, accuses Novartis of illegally offering rebates, lavish speaking fees, and even “opulent” meals—including a $10,000 dinner for three at the Japanese restaurant Nobu—to induce doctors to prescribe its drugs. A Novartis spokeswoman said the company would mount a vigorous defense.

Retail: Best Buy scuttles European efforts

Best Buy is leaving Europe, said Ann Zimmerman in The Wall Street Journal. The electronics retailer will sell its 50 percent interest in Carphone Warehouse Group back to its British partner after a failed joint effort to build Best Buy’s big-box stores across Europe. Best Buy began dismantling its partnership with Carphone Warehouse in 2011, closing stores in the U.K., and said it would now take a noncash charge of $200 million to finish the pullout. “This transaction allows us to simplify our business, substantially improve our return on invested capital, and strengthen our balance sheet,” said CEO Hubert Joly.

Bankruptcy: Kodak to exit Chapter 11

Eastman Kodak’s bankruptcy is winding down, said Matthew Daneman in USA Today. The photography pioneer plans to “settle a shortfall of nearly $3 billion” in its U.K. pension plan by selling its scanner, film, and photographic-paper businesses to the company’s pension fund. Kodak said it would fetch $650 million from the deal, and the pension plan would write off roughly $2.8 billion in claims against the firm. A pension fund spokesman said the acquired businesses would “deliver long-term cash flows to support the plan’s obligations.” Kodak said it expects to emerge from bankruptcy protection as soon as July.

Economy: Growth rate disappoints

The U.S. economy grew by just 2.5 percent in the first quarter, less than economists expected, said Laurent Belsie in CSMonitor.com. While 2.5 percent was better than the 0.4 percent rise at the end of 2012, analysts say this “may be as good as it gets this year,” as higher payroll taxes and slashed federal spending offset strong growth in home construction and car sales. The Congressional Budget Office says sequester cuts “could shave 0.6 percentage point off GDP growth” in 2013.