Home Prices Climb for Fourth Straight Month

The widely followed S&P Case-Shiller Home Price Index, reporting with a 45 day delay, has just released July’s numbers for 120 major cities. While prices are down around 4.1% from a year ago, they rose on average 0.9% in July compared to June. This represents the fourth month in a row with increases.

S&P spokesman David Blitzer states that this could be the start of a trend and a recovery, but that there can be no confirmation of that without a continuation of increases at least through the end of the year. Adjusted for seasonal differences, the 20 city Case-Shiller index was flat month-over-month. For some cities, the index is indicating surprising strength, examples:

- Detroit – prices jumped 3.8% in July after a spike of 5.8% in June. This may indicate a bottom in a really hard-hit market.

- Minneapolis – prices increased 2.6%

- Washington – recorded a price rise of 2.4%

At the other end of the spectrum is Las Vegas, down another 0.2%, and Phoenix edging 0.1% lower. Housing starts remain near historic lows, and consumer confidence remains depressed. Blitzer states: “These combined statistics indicate the market is still bottoming and has not turned around.”

Stan Humphries, chief economist for the website Zillow is not optimistic, stating: “I still believe that the continued fears about a Greek default, weak employment growth, and low consumer confidence will ultimately translate into weaker housing performance in the back half of this year.” Complicating things is the roughly one-quarter of homeowners who are underwater in their mortgages, and the risk that more foreclosures will come from this group.

Blitzer is still optimistic though, citing that home sales were up 20% in August compared with a year ago, and that foreclosures have been dropping since the first of this year.