Home Prices Rose In April

Home prices showed a slight increase in April over March, but remain lower than they were a year ago. The monthly S&P Case-Shiller Home Price Indices offer a glimmer of hope to homeowners wondering when the value of their homes will stop eroding.

The company said the 10- and 20-City Composites were up 0.8 percent and 0.7 percent, respectively, in April versus March. But both indices are lower than a year ago; the 10-City Composite fell 3.1 percent and the 20-City Composite is down 4.0 percent from April 2010 levels.

In fact, six of the 20 Metropolitan Statistical Areas (MSA) showed new index lows in April – Charlotte, Chicago, Detroit, Las Vegas, Miami and Tampa. Thirteen of the cities and both composites posted positive monthly changes. But to industry observers, any news that isn't all bad is good.

Welcome shift

“In a welcome shift from recent months, this month is better than last - April’s numbers beat March,” said David M. Blitzer, Chairman of the Index Committee at S&P Indices. “However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the Spring-Summer home buying season. It is much too early to tell if this is a turning point or simply due to some warmer weather.

Other housing statistics show the same trends and reinforce the glimmer of hope. Single-family housing starts were up in May, but still well below their 2010 levels and still very close to their 30-year low.

Existing home sales rose in May, but are still about 15 percent below last year’s pace and about 35 percent below their 2005 pace. While foreclosures remain a large factor in most parts of the country, the S&P/Experian Consumer Credit Default indices show a small decline in the pace of new defaults since last November.

Even harder now to get a mortgage

But there's less hope that first time homebuyers will rush in and scoop up the bargains. S&P says other reports confirm that banks have tightened lending standards in the past year making it harder to qualify for a mortgage despite very low interest rates.

“In the monthly details, only seven cities experienced lower prices compared to 18 in March,” Blitzer said. “However, the seasonally adjusted figures saw less dramatic improvement. The annual rate of change for the 10-City remained the same at -3.1 percent, whereas the 20-City fell further from -3.8 percent reported for March to -4.0 percent for April. For a real recovery we would need to see several months of increasing home prices, large enough to shift the annual momentum to the positive side. In short, better news, but still a lot of questions and a long way to go.”

Only one city – the nation's capital – continues to post a year-over-year gain. Home values in Washington, DC are up four percent over April 2010. Minneapolis was the only city that demonstrated a double-digit annual decline, falling 11.1 percent.