Home prices rise in all big cities in May
Monthly price gain of 2.2% may bode well for summer, though prices dip from 2011 levels.
Spring may have officially closed on a positive note, thanks to today's S&P/Case-Shiller Home Price Index data (PDF).
Home prices increased 2.2% from April to May in the index's 10- and 20-city survey, the largest such month-to-month jump in nonseasonally adjusted data in the larger index's 12-year run. Seasonally adjusted, prices were up 0.9% from April. Prices in the 10-city index were down 1% from May 2011, and the 20-city index showed a 0.7% annual decrease. But both dips were less severe than in April, when 10 of the larger index's 20 cities showed a yearly decrease.
In May, 17 cities logged annual gains, led by Phoenix's 11.5% increase. All also showed gains from month to month.
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Much of this growth, as The Wall Street Journal's Nick Timiraos writes, came on the low end of the market. From his post on the WSJ's "Developments" blog:
In Phoenix, for example, the bottom third of the market (homes below $118,000) is up by 25.8% over the past year. The 7.2% gain for the top third of the market (homes above $198,000) isn’t too shabby, either.
Timiraos also notes that the low end of Miami's market showed a 1.8% increase in May from the previous year, with the top third of homes logging a 3.7% gain.
As has been the case in the past few months, however, the elephant in the room may be the backlog of foreclosure properties still waiting to hit the market. Earlier this month, real-estate website Trulia called out Phoenix and Miami as "turnaround towns" that may see an about-face. Both regions took the housing crash particularly hard, compared with areas that saw less price fluctuation the past few years.
In addition, as home prices start to climb, sales may be suffering. Existing-home sales were down 5.4% in June from May, new-home sales decreased 8.4% in that time, and the number of home-sale contracts dropped 1.4%.
The reason, analysts say, is there may not be enough homes for sale. The nation's existing-home inventory was down 19% in June from June 2011, Realtor.com reported. If supply increases again — especially if more foreclosures hit the market — will prices slide?
"June data for existing-home sales, new-home sales, housing starts and mortgage default rates were a bit mixed, but all are better than their year-ago levels," David M. Blitzer, chairman of the Index Committee at S&P Indices, said in a new release. "The housing market seems to be stabilizing, but we are definitely in a wait-and-see mode for the next few months."
— Tony Stasiek is a producer/editor at MSN Real Estate.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.