Home prices rise in August for fourth straight month

Existing-home prices may be suffering because of the high number of foreclosures and other distressed homes on the market, but overall home sales aren't doing quite so shabbily these days.

A closely watched index of home prices in 20 metropolitan areas showed a 1% increase in home values from July to August, the fourth consecutive monthly increase for the index.

Even though prices were still below where they were a year ago, the rate of decline continued to improve for the seventh month in a row, according to Standard & Poor's/Case-Shiller home price indexes.

• Government programs may be artificially raising home prices

"While many of the markets remain down versus this time last year, the relative rate of decline has shown some real improvement," said David Blitzer, chairman of S&P's index committee. "California, in particular, has seen some real positive prints in recent months."

But Dallas and Denver remain the stars of annual home values, as both near positive territory, with Dallas posting a decrease of 1.2% and Denver 1.9% from August 2008. And for the first time, New York and San Diego have reached single-digit annual declines, at 9.6% and 8.9%, respectively.

• Where are the most livable bargain markets?

Only Cleveland showed a worsening annual decline from the 20-city composite, which overall shows an 11.3% decline over August 2008, while the 10-city composite shows a 10.6% decline. Cleveland also was one of only four cities where home prices continued to fall from July to August, with Seattle, Charlotte, N.C., and Las Vegas also posting declines that took prices to their lowest levels yet.

On the other end of the spectrum, San Francisco and Minneapolis led the monthly gains with increases greater than 2%.

Having a hard time believing the market is well on its way to recovery? You may be right.

"Once again, however, we do want to remind people of the upcoming expiration of the federal first-time buyer's tax credit in November and anticipated higher unemployment rates through year-end," Blitzer said. "Both may have a dampening effect on home prices."

• Congress could decide soon whether to extend the homebuyer tax credit

By this time, homebuyer-hopefuls who haven't already begun the buying process have a slim chance of meeting the deadline, which requires participants to close on a home by Nov. 30 to qualify for the $8,000 tax credit.

And so far the upcoming deadline has seemed to boost sales, with the National Association of Realtors reporting that sales of existing homes climbed 9.4% in September, reaching a two-year high.

But with home prices near levels not seen since the fall of 2003, people may simply continue to buy because they can. Unless, of course, they can't because they're unemployed, among many other economic ailments now plaguing the nation.

• How to repair your credit before buying a house

Look at it this way. Since the peak in the second quarter of 2006, prices have fallen 29.3% in the 20-city composite and 30.2% in the 10-city composite. And 18 cities in the 20-city index still are posting double-digit decreases since then; Vegas takes the prize with a 55.6% decline since its peak.

You're not going to find much better prices than these, so get buying. Consumer confidence needs a boost!