Home prices increased 3.6 percent over the second quarter of this year, after having fallen 4.1 percent in the first quarter, according to the latest ""S&P/Case Shiller index"":http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff--p-us released Tuesday.
With the second quarter's data, the national index reading recovered from the double-dip cyclical low hit at the end of the first quarter, but still posted an annual decline of 5.9 percent when compared to the second quarter of 2010.
Nationally, home prices are back to their early 2003 levels, according to ""Standard & Poor's"":http://www.standardandpoors.com. By the companyÃ¢â‚¬â„¢s assessment, nearly a yearÃ¢â‚¬â„¢s worth of pricing was recovered over Q2. At the time the companyÃ¢â‚¬â„¢s index officially double-dipped, reporting on data through the end of March, S&P put home prices back in their mid-2002 range.
Both the 10- and 20-city composites of the Case-Shiller index posted a 1.1 percent gain between May and June. It was the largest single-month increase in over a year and the third consecutive monthly rise, but it was widely anticipated.
Contacts we spoke with in the industry were expecting to see an uptick for the month in the range of 1.0 to 1.5 percent, due to typical seasonal factors.
Even with big and subsequent monthly gains, as of the end of June the 10-city composite reading came in 3.8 percent below June 2010, with the 20-city composite positioned 4.5 percent lower than its value from a year earlier.
Galen Ward, CEO of the real estate site ""Estately.com"":http://www.estately.com, says when comparing the latest numbers to last year, you have to put it into the context of the homebuyer tax credit[COLUMN_BREAK]
stimulus, which had a closing deadline of June 30, 2010 before the cutoff was extended to September 30, 2010.
Ã¢â‚¬Å“The promise of an $8,000 credit likely influenced some buyers to be more lax on negotiating a price down by an additional thousand or twoÃ¢â‚¬Â and that had an impact on last JuneÃ¢â‚¬â„¢s values, Ward explained.
Ã¢â‚¬Å“This yearÃ¢â‚¬â„¢s pool of buyers had no such incentive, and were therefore more likely to negotiate lower prices, further lowering the year-over-year index numbers,Ã¢â‚¬Â according to Ward.
As of June 2011, 19 of the 20 metropolitan statistical areas (MSAs) covered by the S&P/Case-Shiller index were up versus May Ã¢â‚¬" Portland was flat. However, they were all down compared to June 2010.
Minneapolis posted a double-digit 10.8 percent annual decline. PortlandÃ¢â‚¬â„¢s not far behind with a 9.6 percent drop compared to last year. Thirteen of the 20 metros saw improvements in their annual rates of decline, however they all are in negative territory and have been so for three consecutive months.
Ã¢â‚¬Å“With the economy weakening again, confidence falling, and the labor market recovery faltering, the rise in Case-Shiller house prices in the second quarter probably does not mark the end of the housing downturn,Ã¢â‚¬Â commented Paul Dales, senior U.S. economist with ""Capital Economics"":http://www.capitaleconomics.com. Ã¢â‚¬Å“Even if it did, a persistent lack of demand means prices are unlikely to rise significantly until 2014 at the very earliest.Ã¢â‚¬Â
Dales says the recent improvement weÃ¢â‚¬â„¢re seeing in home price indices is largely due to the fact that discounted distressed sales are accounting for a smaller share of overall sales Ã¢â‚¬" primarily a byproduct of the slower rate at which foreclosures are being processed, rather than a reduction in the number of homes facing foreclosure.
With another three million homes still likely to enter foreclosure, Dales says prices could fall back in the second half of this year, perhaps by 2 percent, which would ultimately put 2011 prices 3 percent below last year.
Ã¢â‚¬Å“The more important point is that, once prices do reach a floor, there is not going to be a rapid rebound,Ã¢â‚¬Â according to Dales.