WASHINGTON (AP) - Home prices rose in May
from April in every city tracked by a leading index, a sign that
increasing sales and tight inventories are supporting a modest housing
recovery.
The Standard &
Poor's/Case-Shiller home price index released Tuesday showed increases
in all of the 20 cities tracked. And a measure of national prices rose
2.2 percent from April to May, the second increase after seven months of
flat or declining readings.
Chicago, Atlanta and San
Francisco posted the biggest monthly increases. Detroit, San Diego and
Charlotte posted the smallest gains.
Phoenix, one of the
hardest-hit cities in the housing slump, posted the strongest
year-over-year gain in home prices. Still, prices there remain more than
50 percent below their peak, reached in summer 2006.
The increases partly reflect the impact of seasonal buying. The month-to-month prices aren't adjusted for seasonal factors.
In the past year, the
20-city price index has dropped 0.7 percent, the smallest decline since
September 2010. That's much lower than the 1.8 percent year-over-year
decline in April.
Many economists were encouraged by the widespread nature of the increases.
"The fact that most regions
... have seen gains in recent months is a positive sign that the
gradual improvement in housing conditions is becoming broader based,"
Peter Newland, an economist at Barclays Capital, said in a note to
clients.
David Blitzer, chairman of
the S&P's index committee, cautioned that the trend would need to
continue into the summer and fall to ensure that it isn't just a
reflection of strong springtime and early summer sales.
"The housing market seems to be stabilizing, but we are definitely in wait and see mode for the next few months," he said.
Economists also said that prices may be higher because foreclosures are making up a smaller share of home sales.
The S&P/Case-Shiller
monthly index covers roughly half of U.S. homes. It measures prices
compared with those in January 2000 and creates a three-month moving
average. The May figures are the latest available.
The housing market is
recovering, but at a slow and uneven pace. Sales of new homes fell in
June after reaching a two-year high in May. Sales of previously occupied
homes also fell last month, but were higher than a year ago.
Builders are getting more
confident, partly because they are seeing more interest from potential
buyers. Builders broke ground in June on the most new homes and
apartments in four years.
Even with the gains, the
index is 33 percent below its peak reached in the summer of 2006, at the
height of the housing boom. Based on the 20-city index, home prices are
now at about the same level as in early 2003.
The supply of homes for
sale remains very low, which has helped stabilize prices. At the current
sales pace, it would take six and a half months to exhaust the supply
of previously-occupied homes. That's just above the six months
economists consider healthy.
There were 144,000 new
homes for sale in June, only slightly higher than the 143,000 in May,
which was the lowest supply on records dating back to 1963.
Despite the modest gains in
housing, the broader economy has weakened in recent months. Employers
have added an average of only 75,000 jobs a month in the April-June
quarter. That's much lower than the average of 226,000 added in the
first three months of this year.
Housing added to economic
growth in the second quarter, but the sector isn't large enough to make a
big difference. The economy expanded at only a 1.5 percent annual rate
in April-June, below the first quarter's 2 percent pace. Both readings
are much lower than the fourth quarter's 4.1 percent growth.
