June 28, 2011 (Chris Moore)
Spring sales boosted monthly home prices for the first time in eight months according to the latest S&P/Case-Shiller Home Price Indices. Both the 10-City and 20-City Composites showed unadjusted gains of 0.8 percent and 0.7 percent, respectively, from March to April, though prices continue to be below the levels recorded in April 2010.
Year-over-year, the 10-City Composite was 3.1 percent lower than April 2010 and the 20-City Composite was down 4.0 percent from the same time last year.
When adjusted for seasonal factors, such as accounting for the normal uptick in sales due to the spring selling season, prices actually dropped. Prices for April dropped 3.1 percent for the 10-City Composite and 3.8 percent for the 20-City Composite compared to March when seasonally adjusted.
Still, when taken in conjunction with other housing statistics showing the same trends, the news was a welcome relief.
“In a welcome shift from recent months, this month is better than last – April’s numbers beat March,” says 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. 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% below last year’s pace and about 35% 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. 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,” Blitzer added.
In the 20-City Composite, prices rose in 13 of the 20 cities in April, with the sharpest increases recorded in Washington, D.C., San Francisco, Atlanta and Seattle. Six of the 20 cities, Charlotte, Chicago, Detroit, Las Vegas, Miami and Tampa, showed new index lows in April.
Overall, both Indices are back to their summer of 2003 levels with some areas at lows not seen in a decade. As of April 2011, Cleveland, Detroit and Las Vegas are the three markets where average home prices are lower than where they were 11 years ago, with Phoenix and Atlanta close to that.
“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,” Blitzer said.
Tags: S&P/Case-Shiller Home Price Indices, home price index, housing prices, increasing home prices, 10-City Composite, 20-City Composite