CoreLogic Home Price Index Shows Second Straight Monthly Increase

Home prices in the U.S. rose in May, marking the second straight month of gains, according to ""CoreLogic"":http://www.corelogic.com.

[IMAGE]

Index data released by the firm Thursday show that national home prices, including distressed sales, increased by 0.8 percent between April and May. Compared to May 2010, CoreLogic's latest reading is down 7.4 percent.

CoreLogic notes that when distressed sales â€" REO and short sale transactions â€" are taken out of the equation, year-over-year prices declined by just 0.4 percent.

The company asserts that the spring buying season has brought with it more demand for non-distressed properties, which has contributed to the short-term gains in prices seen over the past couple of months.

""Two consecutive months of month-over-month growth and continued relative strength in the non-distressed market segment are positive seasonal signs in the housing market,"" said Mark Fleming, chief economist for CoreLogic. ""Slowly declining shadow inventory and stabilized negative equity levels are also positive signs.""

CoreLogic ""reported last week"":http://dsnews.comarticles/shadow-inventory-shrinks-on-more-distressed-sales-and-fewer-delinquencies-2011-06-22 that the industry’s shadow supply fell to 1.7 million units in April, down from 1.9 million units 12 months earlier.

The ""underwater ratio"":http://dsnews.comarticles/underwater-ratio-improves-but-seconds-sinking-2011-06-07 has also improved, according to CoreLogic’s analysis. The company says as of the end of March, 10.9 million, or 22.7 percent, of all residential

[COLUMN_BREAK]

properties with a mortgage were in negative equity. That’s down from 11.1 million, or 23.1 percent, at the end of last year.

“CoreLogic's house price data for May provide further evidence that the five-year long decline in prices may be drawing to a close,” said Paul Dales, senior U.S. economist for ""Capital Economics"":http://www.capitaleconomics.com.

He added, though, that he remains concerned prices may still slip a little further.

“Either way, the chronic lack of demand and still high excess supply suggests a major rebound is not imminent,” Dales said.

He points out that recent media reports have neglected to acknowledge that most of the recent pickup in house prices is nothing more than the normal seasonal upturn.

It is these effects that explain the bulk of the second consecutive increase in prices on the CoreLogic index in May and the 0.7 percent month-over-month rise in April reported by Case-Shiller on Tuesday, according to Dales.

He says it is more informative to look at prices after taking into account these seasonal swings.

“After applying our own seasonal adjustments to CoreLogic's data, prices in May fell by 0.1 percent m/m,” Dales explained. “That said, it is clear that the trend has improved. May's fall was smaller than those at the end of last year. Moreover, revisions to the back data mean that prices did not fall at all in March and actually rose by 0.2 percent m/m in April.”

According to CoreLogic’s latest report, the states with the highest appreciation in May were: New York (+4.4 percent), Vermont (+3.9 percent), North Dakota (+3.8 percent), Hawaii (+2.5 percent), and the District of Columbia (+0.5 percent).

The five states with the greatest depreciation were: Idaho (-16.4 percent), Michigan (-12.9 percent), Arizona (-12.1 percent), Illinois (-11.8 percent), and Nevada (-11.6 percent).