Home Prices Show Signs of Stabilizing
Even though reports on existing and new home sales have painted a very bleak picture over the last two weeks, there are some signs that the housing market could be stabilizing. According to the S&P/Case-Shiller Home Price Index released early Tuesday, home prices across the nation have risen by a substantial 3.6 percent over the last twelve months. The report also showed prices 4.4 percent during the second quarter after a 2.8 percent drop in the first quarter.
Analysts say that while there is a long road ahead for a full recovery in the market, housing is certainly better now than at this time last year. A significant percentage of the second quarter rise in sales was spurred on by the federal $8,000 tax credit for first time homebuyers. In order to qualify for the credit, Americans were required to sign a purchase agreement by April 30th and close by June 30th, though the close deadline was later moved back.
With the tax credit's impact no longer being felt within the market, many analysts predict several months of falling sales. These concerns were certainly not alleviated by the July existing home sales report, which showed a record-low sales pace for the month. Add to that the near record low pace of sales for new homes, the continued high rate of joblessness across the country, and the still-growing glut of unsold homes on the market and you have a perfect recipe for sluggish demand in the housing sector.
The S&P/Case-Shiller price index showed a gain in prices for all but one of the twenty metropolitan areas tracked. The index is up about one percent from last month, and 4.2 percent over the same month last year. Las Vegas, Nevada was the only metro area showing a decline for July prices, down 0.6 percent from June. Chicago, Illinois, Detroit, Michigan, and Minneapolis, Minnesota all posted a 2.5 percent gain, tying for the largest monthly rise among the twenty markets tracked.
Fifteen of the twenty markets showed year-over-year gains, and Las Vegas showed the largest decline with a year-to-year loss of 5.2 percent. San Francisco, California had the biggest yearly gain in prices with 14.2 percent. San Diego, California and Minneapolis were the only other two areas with double-digit gains, at 11.1% and 10.6%, respectively.