Home Prices Post Monthly Increase

U.S. home prices continued their multiyear slide in May, according to the S&P Case-Shiller home-price indexes, although the indexes showed their fourth-straight month of slightly smaller declines and increased month-to-month for the first time in nearly three years.

Sixteen of 20 major metropolitan areas posted price declines of more than 10% from a year earlier, with the Sun Belt continuing to be hit the hardest. Nationally, home prices are at levels similar to the middle of 2003.

Separately, U.S. consumer confidence retreated once again in July, a report released Tuesday said.

David M. Blitzer, chairman of S&P's index committee, said the pace of descent appears to be slowing. "While many indicators are showing signs of life in the U.S. housing market, we should remember that on a year-over-year basis home prices are still down about 17% on average across all metro areas, so we likely do have a way to go before we see sustained home-price appreciation," he said.

As of May, the 10-city index is down one-third from its mid-2006 peak and the 20-city is down 32%. The two indexes posted their first monthly increases in 34 months.

The indexes showed prices in 10 major metropolitan areas fell 17% in May from a year earlier and edged up 0.4% from April. In 20 major metropolitan areas, home prices also dropped 17% from the prior year and rose 0.5% from April.Thirteen regions reported a slight price increase in May from a month earlier, and four of the 20 areas saw a smaller decline compared with April.

Month-to-month gainers were led by Cleveland, which posted a 4.1% gain, and Dallas, which grew 1.9%. Las Vegas again fared worst, dropping 2.6%.

For the 14th straight month, no region was able to avoid a year-over-year decline. Phoenix and Las Vegas were again the worst performers, with drops of 34% and 32%, respectively. San Francisco again followed with a 26% decline. Phoenix is down 55% from its peak in June 2006.

The data come a few days after data from the Commerce Department showed new-home sales soared in June, marking the third increase in a row, although prices fell 12% amid too much supply. The National Association of Realtors also said last week that existing-home sales rose again in June, though prices are down sharply compared to a year earlier.

Source: Wall Street Journal