Economic Report

Aug. 28, 2012, 10:41 a.m. EDT

U.S. home prices continue upward move in June-2012

By Steve Goldstein, MarketWatch 

                               

WASHINGTON (MarketWatch) — U.S. home prices bounced higher for a second month in June, according to an index released Tuesday which showed the strongest back-to-back monthly advance in the more than decade-long history of the price gauge.

Reuters

A U.S. flag decorates a for-sale sign at a home in the Capitol Hill neighborhood of Washington, August 21, 2012.

The S&P/Case-Shiller 20-city composite index registered a 2.3% advance in June, matching upwardly revised gains in May and taking the year-on-year move to positive territory for the first time in close to two years with a gain of 0.5%.
All 20 cities managed monthly gains, including a 6% surge in hard-hit Detroit and a 4.8% advance in Minneapolis. Read more about Detroit.
Prices in the second quarter gained 6.9% compared to the first quarter. See city-by-city split.
“We seem to be witnessing exactly what we needed for a sustained recovery; monthly increases coupled with improving annual rates of change. The market may have finally turned around,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.

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Even with the gains, prices have still fallen a long way from their 2006 peaks — roughly 31%.
The Case-Shiller index is unique in that it measures prices on a three-month rolling basis, so June’s figures include transactions in April and May.
Other house-price measurements have shown even stronger moves. CoreLogic reported a 2.5% year-on-year gain, and a measure of prices on mortgages bought or guaranteed by Fannie Mae or Freddie Mac showed a 3.6% gain.
Sales activity has been climbing even more rapidly than prices, with the three-month average of new home sales up 21% compared to the same period a year ago. See slides of recent economic indicators.
Near-record-low mortgage rates and a slowly improving jobs market have helped contribute to the improving housing picture. There also is less distressed activity, which helps keep prices higher.
“Persistent news of rising house prices should start convincing prospective home sellers that it’s not just a buyers’ market. And when Americans become more comfortable with selling their home, they also become more comfortable with buying another one,” said Jonathan Basile of Credit Suisse in a note to clients.

Blitzer sees "significant turn" for housing market

The pattern is "clearly going upward," says David Blitzer, who oversees the Case-Shiller home price index for Standard and Poor's.

Michelle Meyer of Bank of America Merrill Lynch sounded a more cautious tone.
“We believe that prices will soften heading into year-end, reflecting seasonal adjustment challenges, greater distressed inventory and a weakening economy. We have found the bottom, but it will be choppy recovery,” she said.
Elsewhere on Tuesday, an indicator of consumer confidence fell to a nine-month low in August. Read more on consumer confidence.