S&P/Case-Shiller Home Prices Step into Positive Territory, a First in 3 Years

The change in home prices from February 2009 to February 2010 was positive in the latest edition of the Standard & Poor’s (S&P)/Case-Shiller Home Price Indices. While the results mark the first time since December 2006 that home prices improved year-over-year, it is very likely the results are due to a surge in home buying leading up to this week’s expiration of the homebuyer tax credit. “The homebuyer tax credit, available until the end of April, is the likely cause for recent, encouraging housing statistics and this may also flow through to some of our home price data in the next few months,” said David Blitzer, chairman of the S&P index committee. “It is too early to say that the housing market is recovering,” Blitzer added. Compared to one year ago, the 10-city home price composite increased 1.4% and the 20-city composite increased 0.6% in February. In January, year-over-year prices in the 10-city composite were level, while the 20-city composite declined 0.7%. As shown in the chart above, home prices are now at levels equal to late summer/early autumn 2003. Since peaking in the summer of 2006 through the trough in April 2009, the 10-city composite is down 33.5% and the 20-city composite is down 32.6%. From summer 2006 to February 2010, the 10-city composite is down 30.7% and the 20-city composite is down 30.3%. The results echo another home price index released Monday from First American CoreLogic, which showed a 0.3% year-over-year increase in February, the first annual increase in three years. In 11 of the 20 markets surveyed, prices were down year-over-year. The largest decline, 14.6% in Las Vegas, was the only double-digit decrease. In six markets — Charlotte, Las Vegas, New York, Portland, Seattle and Tampa — prices reached new price lows in the housing cycle. “Beginning last November, each report showed gains as fewer cities reported year-over-year declines than in the previous month; those gains ended with this report,” Blitzer said. “These data point to a risk that home prices could decline further before experiencing any sustained gains.” In every market except San Diego, prices declined from January levels and 14 markets have fallen for at least four consecutive months. San Diego saw a 0.6 percent increase from January. “This simply confirms that the pace of decline is less severe than a year ago,” Blitzer said. “We should also pay heed to foreclosure activity, which have reached their highest level in at least the last five years. As these homes are put up for sales, we may see some further dampening in home prices.” Write to Austin Kilgore.

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