Case-Shiller Index Posts Second Straight Increase

For the second month since recording an official double-dip in home prices, the ""S&P/Case-Shiller index"":http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff--p-us has posted an uptick.

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Data released Tuesday by ""Standard & Poor's"":http://www.standardandpoors.com shows that 16 of the 20 metros included in the study and both composites reported positive monthly increases.

The 10- and 20-city composites were up 1.1 percent and 1.0 percent, respectively, in May over April.

Detroit, Las Vegas, and Tampa were down over the month and Phoenix was unchanged.

On an annual basis, Washington D.C. was the only metro with a positive rate of change, up 1.3 percent.

The remaining 19 metros were down in May 2011 versus the same month last year. Minneapolis fared the worst posting a double-digit decline of 11.7 percent.

The 10-city and 20-city composites recorded annual declines of 3.6 percent and 4.5 percent, respectively, when compared to May 2010. (Last year’s spring season had the benefit of federal homebuyer tax credits which served to boost activity.)

Still, David Blitzer, chairman of the index committee for S&P, says he’s seeing some seasonal improvements in May’s data.

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“This is a seasonal period of stronger demand for houses, so monthly price increases are to be expected and were seen in 16 of the 20 cities,” Blitzer said. “However, 19 of 20 cities saw prices drop over the last 12 months. The concern is that much of the monthly gains are only seasonal.”

Blitzer also noted that May’s report showed unusually large revisions across some of the metros, in particular, Detroit, New York, Tampa, and Washington D.C.

He says these markets reported a lot more sales from prior months than previously recorded, which caused the revisions.

“The lag in reporting home sales in these markets has increased over the past few months,” Blitzer said. “Also, when sales volumes are relatively low, as is the case right now, revisions are more noticeable.”

Blitzer also highlighted recent housing statistics indicating a leveling off in existing-home sales, contract cancellations, and tight credit.

“These data all support a continuation of the ‘bounce-along-the-bottom’ scenario we have witnessed in the housing market over the past two years,” he said.

Although we have now seen two consecutive months of generally improving prices, Blitzer says the industry still has a long way to go before there is evidence of a real recovery.

“Sustained increases in home prices over several months and better annual results need to be seen before we can confirm real estate market recovery,” he said.

Measured from their peaks in June/July 2006 through May 2011, the S&P/Case-Shiller 10-city composite is down 32.1 percent and the 20-city composite is down 32.3 percent.

According to S&P, as of May 2011, average home prices across the United States are back to the levels where they were in the summer of 2003.