U.S. Home Prices Rise for First Time in Three Years

[Purveyor]

Source: Bloomberg

July 28 (Bloomberg) -- Home prices posted their first monthly gain in three years in May, a gauge of values in 20 major U.S. cities showed, reinforcing signs of stabilization in a market hammered by the worst slump since the 1930s.

The S&P/Case-Shiller home-price index rose 0.5 percent from April, the first monthly gain since July 2006 and biggest since May of that year, the group said today in New York. The measure was down 17.1 percent from May 2008, less than forecast and the smallest year-over-year drop in nine months.

Price declines may keep moderating as demand steadies and distressed properties account for a smaller share of transactions. Even so, rising unemployment, stagnant confidence and the loss of wealth caused in part by the drop in property values mean a rebound may be slow to take hold.

“After three years of this nasty housing recession, I think we’ve got to be pleased with such an improvement in a relatively short period,” said Harm Bandholz, U.S. economist at UniCredit Research in New York.

Economists forecast the index would drop 17.9 percent from a year earlier, according to the median of 32 projections in a Bloomberg News survey. Estimates ranged from declines of 17.5 percent to 18.3 percent.

Compared with a month earlier, 14 cities showed price gains, led by a 4.1 percent jump in Cleveland and a 1.9 percent increase in Dallas.

The price figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aubrgv4TH7tE

[kestrel91316]

1. Well I like this trend, even though it keeps me from owning, lol.

My clients need their homes to be worth at least what they owe before they will loosen their purse strings and start spending on cats again. We tanked in late 2006, so my income is very closely linked to home values here in SoCal, it seems.

[TheWatcher]

4. read the Post below.

Once again, good people are taking Propaganda at face value.

Propaganda is not going to change reality.

I really wish I knew what it took to get people to see that.

[PSPS]

2. Again, meaningless spin. Year-over-year figure is DOWN 17%

The S&P/Case-Shiller home-price index rose 0.5 percent from April, the first monthly gain since July 2006 and biggest since May of that year, the group said today in New York. The measure was down 17.1 percent from May 2008, less than forecast and the smallest year-over-year drop in nine months.

Jesus, this is like Pravda! Sales always go up between April and May and on through the peak selling months of summer. But leave it to our Potemkin press to spin this as if it were "green shoots." Prices are up!!11!! BOTTOM!!11!! BUY!!11!! Feed free to browse the realty ads in our advertising!!111!!

[Grinchie]

3. You can say that again, reading this is like Watching a Taffy pulling machine

It is incredible that they are still trying to trigger kneejerk responses from the extremely limited pool of investors that would actually fall for this crap.

Although, if you read between the lines, you'll see that the green shoots are growing in solid rock, and that one hot day without a liberal sprinkling of water will destroy them in a few minutes.

This article is kind of like a Horoscope. Generally written in such a way as to apply equally well to however the reader feels at that particular moment. The reality however, is much more grim.

[Igel]

5. Then the only inference is that

nothing has improved until there's an increase over last year's numbers.

That it's the smallest drop implies that there's at least a decline in the rate of decrease of house prices. Of course, the implication is valid and need not be inferred since the news isn't that sales were up, but that house prices were up. Do house prices always increase between Aparil and May through the summer, only to drop during the other months?

Moreover, I've read elsewhere that the numbers were "seasonally adjusted". Presumably this is to remove much of the effect of recurrent patterns, making my previous question at least partially moot. I guess we could assume that they're "seasonally adjusted" to exacerbate the effect of recurring patterns, or perhaps seasonally adjusted given what the adjuster used to season his previous night's meal. Both seem unnecessarily hostile assumptions, however.

My complaint is that the index is partial. It's reflecting disproportionately areas that saw extreme versions of the housing price increase and then saw the most extreme decreases. In both cases, the picture you get is, well, extreme, and isn't true for large swathes of the country. You wouldn't see this in the press, however, since the media need viewers, and extremes attract viewers.

[AlphaCentauri]

6. I was expecting home prices to be low and static for at least 5 years

while real people's economy get fixed

[PSPS]

7. That's what will happen

There's no doubt that housing prices will be an "L" shaped graph, not a "V" shaped one. Housing prices will continue to drop until they reach the traditional pricing pattern: Median price in a given area is 2 - 3 times median annual household income in the same area. So we've got further to fall. And once it gets there, it won't go up until wages go up and/or inventory gets very tight. Neither of those two conditions are going to be met in the foreseeable future, especially the wages. With over 10% unemployment and no domestic manufacturing anymore, there will be no living-wage jobs. And inventory isn't going to be "tight" for a very long time, what with over a third of current sales already being "distressed" and a trillion dollars' worth of option-ARM's going into foreclosure over the next three years.

Frankly, I think your 5-year-long "bottom" is optimistic. I used to think the Japanese example of a 25-year-long "bottom" would be more accurate, but now I think even that is now too optimistic.