Home value appreciation could lead to more consumer spending, demand for inventory financing

In the past year, homeowners have seen their personal financial situations improve as a result of rising home values. 

Should this lead to increased consumer spending, sales at U.S. retailers could pick up in the near future. As a result, these businesses might need to replenish inventory, which could lead to greater demand for inventory financing

Home value appreciation exceeded 5 percent once again in May, with a 5.4 percent year-over-year gain, according to Zillow Real Estate Market Reports. When compared to the previous month, values were up 0.5 percent. 

Values have now increased or remained flat for 19 consecutive months, and values haven't reached this level since July 2004. 

As additional inventory hits the housing market, price gains are expected to slow to a more sustainable level of 4.1 percent between May 2013 and May 2014. 

"Enjoy it while it lasts, because the housing market will undoubtedly look very different a few years down the road from how it appears now," said Zillow chief economist Stan Humphries. "Inventory constraints are beginning to ease in many areas as more listings and new homes come on line, which will ultimately help end this period of rapid annual home value appreciation above 5 percent."

Inventory has already begun to hit the market, with the National Association of Realtors reporting a 3.3 percent bump in May. 

Even if appreciation slows a bit, homeowners will still benefit from higher home values, which could translate to greater personal financial stability and possibly into more retail sales. 

With the potential of higher sales levels, small- to medium-sized retailers might need to increasingly rely on inventory financing. This form of asset-based lending allows companies to use current product as collateral to obtain a revolving line of credit, which can then be used to purchase additional inventory to keep shelves stocked.