After almost five years of weakness in the housing market, have home prices reached bottom? The widely-used measure of U.S. home prices, S&P/Case Shiller Home Price Indices, showed housing prices increased 0.9 percent in July from June, but areas are still below levels from one year ago.
The Case Shiller 10 and 20 city composite indices showed a fourth consecutive month of increases.
“With July’s data we are seeing not only anticipated monthly increases, but some fairly broad improvement in the annual rates of change in home prices,” David M. Blitzer, chairman of the Index Committee at S&P Indices, said in a statement. “This is still a seasonal period of stronger demand for houses, so monthly price increases are expected and were seen in 17 of the 20 cities.”
Prices increased in cities including Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Miami, and Tampa.
Declines were recorded in Las Vegas and Phoenix, while Denver showed no change in the month.
Detroit’s housing market finally showed positive signs of growth. Detroit and Washington, D.C., were the two metro areas that showed price increases over the year, up 1.2 percent and 0.3 percent, respectively, from July 2010.
With historically low mortgage rates, is now the time to buy a home?
Earlier this month, Freddie Mac announced fixed-rate mortgages fell near 60-year lows as investor concern over the European debt market keep Treasury bond yields low. The 30-year fixed rate mortgage averaged 4.09 percent, a new all-time low. The 15-year fixed rate mortgage, a popular refinancing option, according to Freddie Mac, also reached a new record low, averaging 3.30 percent.
In a statement, Blitzer said despite seeing four consecutive months of increasing home prices, “we do know that we are still far from a sustained recovery.”
Eighteen of the 20 cities that the Case-Shiller report analyzed show home prices are still below where they were a year ago. The 10-City composite is down 3.7 percent and the 20-city composite is down 4.1 percent compared to July 2010.
“Continued increases in home prices through the end of the year and better annual results must materialize before we can confirm a housing market recovery,” he said.
On Monday, the Commerce department reported that new home sales slid for the fourth consecutive month to a 295,000 unit annual rate for August, a 2 percent decline versus the prior month’s revised pace. Many economists say at least double the number of houses must be sold for a robust housing market.