Home prices show signs of stabilizing
In this Aug. 22, 2011 photo, a new home displaying a sale sign is shown in, Springfield, Ill. Fixed mortgage rates edged up this week from their lowest levels in decades. But few have been able to capitalize on them. Credit: AP
Residential real estate prices decreased in the year ended in June at a slower pace than in the prior month, a sign the market may be stabilizing.
The S&P/Case-Shiller index of property values in 20 cities fell 4.5 percent from June 2010, after a 4.6 percent drop in the 12 months ended May that was the biggest since 2009, the group said Tuesday in New York. The median forecast of 31 economists surveyed by Bloomberg News projected a 4.6 percent decline.
Values fell by 0.1 percent in June from the prior month after adjusted for seasonal changes, matching the decrease in May, indicating the deterioration is slowing. Nonetheless, any recovery in home values is probably years away as foreclosures dump more properties onto to the market, while a jobless rate hovering around 9 percent and strict lending rules hurt sales.
"The housing market is depressed," said Anika Khan, an economist at Wells Fargo Securities in Charlotte, N.C. "We'll get some volatility but no real gains, so we're not looking for a recovery for a few years."
Estimates for the price change from June 2010 ranged from declines of 4 percent to 5.5 percent, according to the Bloomberg survey. The Case-Shiller measure is based on a three-month average, which means the June data was influenced by transactions in May and April.
The year-over-year drop in May was the biggest in 18 months.
Nationally, prices decreased 5.9 percent in the second quarter from the same time in 2010. They increased 3.6 percent from the previous three months before seasonal adjustment and climbed 0.1 percent after taking those changes into account.
Prices in the 20 cities climbed before adjusting for seasonal changes, rising 1.1 percent in June from the prior month after climbing 1 percent in May.
The year-over-year gauge provides better indications of trends in prices, according to the S&P/Case-Shiller group. The panel includes Karl Case and Robert Shiller, the economists who created the index.
All of the 20 cities in the index showed a year-over-year decline in June, led by an 11 percent drop in Minneapolis.
The smallest 12-month decrease was in Washington, which showed a 1.2 percent drop.
"This month's report showed mixed signals for recovery in home prices," David Blitzer, chairman of the S&P index committee, said in a statement. "We are back to regional housing markets, rather than a national housing market where everything rose and fell together."
Federal Reserve Chairman Ben S. Bernanke, speaking last week in Jackson Hole, Wyo., said "an overhang of distressed and foreclosed properties, tight credit conditions for builders and potential homebuyers, and ongoing concerns by both potential borrowers and lenders about continued house price declines" have held back the housing market.
During the speech, Bernanke said the economy will probably improve in the second half of 2011, adding the central bank can aid the recovery if needed. Housing will stabilize, "if for no other reason than that ongoing population growth and household formation will ultimately demand it," the chairman said.
