A new survey shows U.S. home prices saw an uptick of 0.9% in July over the previous month, although sales remained slow. The S&P/Case-Shiller 20-city index is a moving three-month average and registered improvement in 17 of the 20 cities it monitors, with Las Vegas, Phoenix and Denver being the exceptions. This marks the fourth consecutive month of slight house-pricing improvement, although industry observers warn it is too soon for optimism, noting the continuing slump in sales and slowing of construction as cause for continued concern. For more on this continue reading the following article from The Street.
U.S. home prices may have inched up for four consecutive months, according to July’s S&P/Case-Shiller 20-city index, but a true housing recovery is still a ways off.
“With July’s data we are seeing not only anticipated monthly increases, but some fairly broad improvement in the annual rates of change in home prices,” said David Blitzer, chairman of the Index Committee at S&P Indices. “This is still a seasonal period of stronger demand for houses, so monthly price increases are expected and were seen in 17 of the 20 cities. The exceptions were Las Vegas and Phoenix where prices fell, while Denver was flat. The better news is that 14 of 20 cities and both [the 20-city and 10-city] composites saw their annual rates of change improve in July.
“While we have now seen four consecutive months of generally increasing prices, we do know that we are still far from a sustained recovery. Eighteen of the 20 cities and both composites are showing that home prices are still below where they were a year ago. The 10-city composite is down 3.7% and the 20-city is down 4.1% compared to July 2010,” he said.
Blitzer added that “continued increases in home prices through the end of the year and better annual results must materialize before we can confirm a housing market recovery.”
The S&P/Case-Shiller 20-city index of home prices, released early Tuesday morning, showed that home prices across the country edged 0.9% higher in July, compared with June prices, though home purchases remained sluggish.
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The index is a moving three-month average, so data for July was swayed by data from May and June.
Falling home prices have done little to spur potential buyers. Data released Monday showed that sales of newly built homes fell 2.3% in August to a six-month low.
A report released earlier this month showed that homebuilders began construction on 5% fewer homes in August, a weaker-than-expected rate, though applications for building permits rose 3.2% to the highest rate this year pointing to the possibility for some sense of stabilization in the home construction market.
Even so, the National Association of Home Builders (NAHB) reported that homebuilder sentiment fell in September to a reading of 14, lower than the 15 economists had expected. Any reading below 50 indicates that more builders view market conditions to be unfavorable than those who view it favorably. The index has not been above 50 since the spring of 2006.
“Very little has changed in terms of housing market conditions so far this year,” NAHB Chairman Bob Nielsen said last week. “Builders continue to confront the same challenges in accessing construction credit, obtaining accurate appraisal values for new homes, and competing against foreclosed properties that they have seen for some time.”
Sales of previously occupied homes did rise more than expected last month — climbing 7.7% to their highest level in five months at an annualized rate of 5.03 million units — thanks to still-depressed home prices and interest rates that remain near record lows, but the news has done little to sway market watchers that the housing sector is doing anything but bouncing along the bottom.
“This housing market is still very distressed,” Bank of America Merrill Lynch economist Michael Hanson told Reuters. “We have to get a lot of good news for a meaningful turnaround in the housing market.”
Stocks in the homebuilder sector were mostly higher Tuesday, though the SPDR S&P Homebuilders(XHB) and iShares Dow Jones US Home Construction,(ITB) exchange-traded funds that track the sector, remain around 70% and 80%, respectively, off their early 2006 peaks.
This article was republished with permission from The Street.