Carr: Case-Shiller Shows Signs of Housing Market Bottom

Tuesday, 26 Jul 2011 07:45 AM

By Michael Carr

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Home prices were up more than 1 percent in May when compared to April prices, according to the S&P/Case-Shiller index of prices in 20 cities.

Prices were higher in 17 of the 20 cities tracked by individual indexes.

Monthly data showed price declines only in Tampa, Las Vegas and Detroit, which are three of the hardest hit markets. Gains of at least 2 percent were seen in Boston, Minneapolis, and Washington, D.C.

Headline numbers show a steep 4.5 percent decline in the home price index compared to a year ago.

homes200getty2.jpg
(Getty Images photo)
Home prices last spring were driven higher by a government program designed to raise prices in the short term. The year-over-year decline seen in the index data reflects the impact that the $8,000 home buyer’s tax credit had on the market in 2010.

The price pattern seen in Case-Shiller confirms the data reported a week earlier by the Federal Housing Finance Agency. According to the House Price Index maintained by the Agency, U.S. home prices rose 0.4 percent from April 2011 to May 2011, but are down 6.3 percent from a year ago.

FHFA calculates the index using purchase prices of houses that are financed with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac, which account for more than 90 percent of all homes sales.

Given the distortion in prices from tax credits in 2010, year-over-year comparisons in home prices are less reliable than usual. Prices in Case-Shiller are unchanged over the past six months, an optimistic sign of a market bottom after five years of falling prices.

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