Home prices across most of the U.S. have started to rise from the depths of the housing slump, a pivotal trend that will help stabilize the broader economy, according to new figures released today.
Home prices across most of the U.S. have started to rise from the depths of the housing slump, a pivotal trend that will help stabilize the broader economy, according to new figures released today.
Nationally, prices in the second quarter posted their first quarterly increase in three years, according to the widely watched Standard & Poor's/Case-Shiller's U.S. National Home Price Index.
The monthly index of 20 major cities also rose from May to June, with Dallas and Denver clocking their fourth-straight increase. Only Detroit and Las Vegas saw prices fall in June.
The recovery, however, will likely be a struggle because a record-high number of mortgage borrowers are behind on their payments or in foreclosure. In many cities, particularly the Sun Belt region in the South and the Southwest, a glut of deeply discounted foreclosures continues to weigh on prices.
THE NEWS: The U.S. National Home Price Index rose 1.4 percent from the first quarter to 133, though was still down almost 15 percent from the second quarter of last year.
Home prices are at levels not seen since early 2003. Prices, on a seasonally adjusted basis, have fallen 30 percent from the peak in the second quarter of 2006.
The monthly index of 20 major cities increased 0.7 percent to 142 from May to June, the second straight month the index didn't decline. It was still 15.5 percent below June a year ago.
Every metro showed annual declines, with fifteen reporting double-digit drops.
THE REPORT: The Case-Shiller indexes measure home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.
WHAT IT SHOWS: The 20-city index is a three-month moving average of repeat sales of a designated group of single-family homes in each city. By measuring the sales price of the same properties over time, the index prevents the data from being skewed by a change in the types of homes sold. Sales between related parties, such as family members, are excluded because they may not reflect true market values.
The Case-Shiller quarterly index is a composite of home price indexes for the nine U.S. census divisions.
WHAT IT DOESN'T SHOW: The indexes only measure price data in 20 major metropolitan areas in 15 states and the District of Columbia. So many areas of the U.S. are not represented.
WHY IT MATTERS: Investors closely watch the Case-Shiller indexes to gauge the level and direction of home prices. The indexes include a broader mix of properties compared to the index created by the Federal Housing Finance Agency. That index excludes many high-end properties, as well as homes bought with riskier mortgages or all cash.
THE QUOTE: "For the second month in a row, we're seeing some positive signs," said David M. Blitzer, chairman of the S&P index committee, adding, "There are hints of an upward turn from a bottom."
