Case Shiller: US Home Prices Up In April
June 26, 2012
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U.S. home values ticked up in April after dropping for seven straight months to new lows, though prices were buoyed largely by increased buying seen in warmer months, the latest S&P/Case Shiller Home Price Index report showed.
While many expected home prices to improve in April, as buyers often choose the spring and summer months to make their move ahead of upcoming school years, the report also linked the price rise to an improvement in demand and rising housing starts.
Both the 10- and 20-City composites were up 1.3 percent in April from March levels, with all but one city surveyed seeing a month-on-month pickup in prices. The improvement comes on the heels of a recent drop to lows not seen since the market started its spiraling decline in mid-2006.
Housing was at the center of the credit crisis that sent the U.S. economy into a recession in 2008, and a recovery in housing remains crucial to lasting U.S. growth going forward. But housing has struggled to find a bottom, as joblessness, hefty supplies and tight credit availability limit demand for homes.
Still, an uptick after seven months of sustained declines is encouraging even if, overall, home prices remain about a third lower than where they were just six years ago, the report suggested.
“We were hoping to see some improvement in April,” David Blitzer, chairman of the Index Committee at S&P Indices, said in the report.
“While one month does not make a trend, particularly during seasonally strong buying months, the combination of rising positive monthly index levels and improving annual returns is a good sign.”
The Good And The Bad
Despite the price increases, home values across the country remain largely at levels not seen since early 2003, the report noted. That said, even if the hole is deep, it appears to have stopped getting deeper for now.
In the previous survey covering March, average home prices tanked to a new cycle low, some 35 percent off the peak levels seen just six years ago. But again, April’s performance seems to have stopped the bleeding.
Nineteen out of the 20 cities included in the report—as well as both the 10-City and 20-City composites—saw month-on-month improvement.
While on an annual basis, the 10-City and 20-City Composites are still respectively 2.2 percent and 1.9 percent lower than they were in April 2011, those year-on-year comparisons were far worse earlier this year.
In April, Detroit was the exception. In that city, home prices dropped 3.6 percent relative to March levels, while all other 19 cities saw month-on-month gains.
The good news is that Detroit’s monthly decline wasn’t enough to erase its annual improvement—year-on-year, home prices in Detroit are still 1.2 percent higher than they were in April 2011.
But it’s worth noting that in the March Case-Shiller survey a month ago, prices in Detroit were 3.9 percent higher on an annual basis. Also, a home in Detroit today is worth less than it was in January 2000.
Atlanta remains the only city to show a double-digit year-on-year decline, even if the comparison was less unfavorable because of April’s 2.3 percent month-on-month price improvement in that city. Home values in Atlanta were 17 percent lower than in April 2011.
On the other side of the spectrum is Phoenix, which leads the pack “with improving trends,” the report said.
Home prices in that southwestern city rose 2.5 percent in April vs. March, and are now 8.6 percent higher year-on-year. That was the highest annual rate of improvement among the 20 cities surveyed.