Home prices rose in all major US cities in May
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.
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.
Millions of foreclosed homes sitting on the balance sheets of every bank except for the North Dakota State Banks and the bankers would have you believe in increased sales due to "tight inventories". Yet another clear illustration of a manipulated, deregulated, predatory capitalist "Free Market" working based clearly on supply and demand. What the bankers demand, we supply.
 @T_BONE_WALKER You keep saying it. There is very little to support this view. I know this goes against your "big dump" view last week of what you perceive as nothing but gloom and doom. The foreclosures in my neighborhood are either sold and reoccupied already, for sale, or in the case of one incredibly neglected foreclosure in full renovation to be put up for sale.
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There is nothing artificial about Seattle's 1.8 month of inventory and King County's 2.5 months of inventory. There is no deep, wide shadow inventory in this region at least.
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See, here is the biggest statistic you ignore in your shadow inventory claim. A massive 42% of all foreclosures are in four states. Florida, Nevada, Arizona and California. Almost half the foreclosures in just four states. You can't even say well Howard Beale, those are the four largest states! Yes, California, Florida is 4th, Arizona is 16th and Nevada is 35th, with most of that population in the Las Vegas region.
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The data I've linked to is not from the banking industry, and is based on March 2011 data. If you would actually look at some REAL data instead of spouting off unsupported claims, you will see there is a state by state volume of distressed properties, and an analysis of which states are in the worst shape and which are in the best shape. For example, Nevada may be one of the most distressed markets, but a whopping 70% of all home sales are foreclosures and distressed properties. The supply was only seven months deep, and that was in 2011!
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http://economistsoutlook.blogs.realtor.org/2011/03/21/state-by-state-estimate-of-shadow-inventory/
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http://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_population
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Here is a more up to date map from March of 2012:
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http://soundbiteblog.com/wp-content/uploads/2012/03/shadowinventory.png
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As you can see, Washington states entire shadow inventory is just four months. In less than two years we went from a 28 months supply to a 4 month supply. How you ask? People are buying homes like crazy right now and it is a sellers market (in OUR REGION NOT NATIONALLY) New York and New Jersey's shadow inventory is so high not because of a massive number of homes on the books (although New York as a state does have a lot of homes in REO) but because only a small percentage of sales are these distressed properties.
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Further evidence that things are getting better fast is the shadow inventory in real estate devestated states of Arizona and Nevada are now into the single digits for months of supply. Phoenix is practically a sellers a market right now.
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The market is much better than you think. I suggest you put the tinfoil hat down or backup your claim with legit third party analysis.
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Oh, and before you go stating I have an agenda as a cheerleader for the real estate industry. I was one of the biggest real estate bears from late 2007 to late 2011 on the old messaging system (under the same screen name). I took a lot of crap from the bulls on my view and called this market PERFECTLY. I am an area home owner, as are about 67% of the people who live in the Seattle area - so if that makes me have "skin in the game" than so be it.
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