Case-Shiller Index: 2Q Showed First National Price Increase In 3 Years

NEW YORK (AP) -- Home prices across most of the country have started to rise from the depths of the housing slump, a critical trend that will help stabilize the broader U.S. economy, according to new figures released Tuesday.

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, 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.

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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 country 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."

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Comments

[rubrik r]

On the analysis of the real estate trends, residential markets hit could hit quite a low during 2009 and are expected to flounder during 2010. Cash flows get crimped due to delinquencies, property values and foreclosures causing the global economy to limp through difficult times.

Financing of properties is going through a huge restructuring process and the pricing should readjust to the new trends affordable by people. This transition is causing a lot of industries and job sectors to be totally wiped out.

Due to various disconnects in the industrial chain, job markets in various segments are down, property owners are sunk in debts and lenders are skeptical to lend and bail out people from the difficult situation. The income to afford to repay loans is declining highly.

Only when the restructuring gets stable and the pricing reconciles and reaches an acceptable and affordable level, the industry is expected to recover. With the housing market in great trouble, moderately-priced apartments have become the core buy.

Read More: http://www.housingnewslive.com

[friendpro]

Everyday it seems like the lib3rals keep back stepping. We make no progress in anything but getting obama elected. Now we get the same rethreads. NO change we can believe in.

good articles 4 slow news day: http://www.iamned.com

When the public demand change if the politicians won't give it to us?

[lcdbsez]

The market was artificially inflated -- by 30-50%, depending on geography, so it's only natural that prices should come down.

And with the weepublicans always screaming about people demanding higher salaries (except the suits in the boardrooms), real estate prices aren't going back up anytime soon, either -- who can afford a house when the only jobs they can get are minimum wage ones????

If you want to fix the problem with the economy, give people good paying jobs and stop bashing the unions and companies that pay decent wages! People can't buy things like houses and cars if they don't have jobs -- duhhhhhhhh.

[outnow]

The rise in prices for homes was a classic asset bubble. Just let things adjust without all kinds of government programs. The government action causes distortion in the market.

Certainly, the banks balance sheets would look better if the bubble is re-inflated but that too should be marked to market instead of re-inflated.

Banker bonuses should be outlawed and the banks should keep a large protion of all loans that they originate on their balance sheets so that they are not over-leveraged.

I do not see a real bottom in the market until the unemployment picture imprioves, and that is a long way off.

[mrcontinental]

And we should be happy that housing is on the way to becoming unaffordable again why?

There is no reason why a house should cost more that $100,000 any where, especially with excellent pre fabs available.

[sonoffestus]

Houses are cheap, it is the land which drives house prices in most places, but I agree. Things went way out of whack.