New York (AP) — Home prices rose for the third straight month in July, new data Tuesday showed, more evidence a fragile housing recovery is under way.
The Standard & Poor’s/Case-Shiller home price index of 20 major cities rose 1.2 percent from June to 143.05.
Although home prices are still 13.3 percent below July a year ago, the annual declines have slowed in all 20 cities for the sixth straight month.
“We expected another gain but this is remarkable,” according to a statement attributed to Ian Shepherdson, chief U.S. economist for High-Frequency Economics. According to the statement, the index has risen at an 8 percent annualized rate in the three months to July, the best performance since early 2006 and the first increase on this basis since mid-2006.
However, the index is down about 33 percent from the peak in mid-2006. Home prices are now at the lowest levels since the third quarter of 2003. And prices in Las Vegas, Detroit and Seattle are still falling.
Prices in Las Vegas, one of the most speculative markets during the housing boom, are down almost 55 percent from their peak. In August, almost 80 percent of home resales in Nevada were either a foreclosure or a sale below the value of the mortgage, according to a survey by the National Association of Realtors.
The Detroit housing market is reeling from layoffs in the automotive industry. Seattle, by contrast, was one of the last areas to enter the downturn so prices there have yet to hit bottom.
And there are still several risks to the national recovery, including rising unemployment and foreclosures and the expiration of a tax credit for first-time homebuyers. First-time homebuyers can qualify for a tax credit worth 10 percent of the purchase price, up to $8,000, but it expires at the end of November. More than a dozen bills to extend the credit have been introduced in Congress, but it’s unclear if lawmakers want to continue subsidizing the real estate market.
Still, there are clear positive trends. Thirteen metro areas posted at least three straight months of price gains.
The biggest gains in July were in Minneapolis, San Francisco and Chicago.
The Standard & Poor’s/Case-Shiller index measures home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.