Home Prices Rise In Second Quarter

The sale price of the average U.S. home rose in the second quarter, reversing a worrisome downward trend. S&P/Cash-Shiller reports its National Home Price Index rose 3.6 percent, following a 4.1 percent decline in the first quarter.

The Index is still 5.9 percent below its second quarter 2010 level, when sales and prices were buoyed by a federal tax credit. The latest reading shows that nationally, home prices are back to what they were in 2003.

In tracking home prices, S&P/Case Shiller breaks the country down into Metropolitan Statistical Areas (MSA). As of June 2011, 19 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were up versus May – Portland, Ore., was flat.

However, they were all down compared to June 2010. Twelve of the 20 MSAs and both Composites have now increased for three consecutive months, a sign of the seasonal strength in the housing market.

The good news is that none of the markets posted new lows with June’s report. Minneapolis posted a double-digit 10.8 percent annual decline; Portland is not far behind at -9.6 percent. Thirteen of the cities and both composites saw improvements in their annual rates; however; they all are in negative territory and have been so for three consecutive months.

Mixed signals

“This month’s report showed mixed signals for recovery in home prices,” said David M. Blitzer, Chairman of the Index Committee at S&P Indices. “No cities made new lows in June 2011, and the majority of cities are seeing improved annual rates.

The numbers seem to indicate signs of a bottom in some areas. Looking across the cities, Blitzer says eight bottomed in 2009 and have remained above their lows. These include all the California cities plus Dallas, Denver and Washington DC, all relatively strong markets. But since, like politics, all reeal estate is local, some parts of the country simply aren't responding the same way.

“At the other extreme, those which set new lows in 2011 include the four Sunbelt cities – Las Vegas, Miami, Phoenix and Tampa – as well as the weakest of all, Detroit,” Blitzer said. “These shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together.”