Home prices on the upswing
A jump in the national S&P/Case-Shiller Home Price Index suggests that the very steep price drops of the past few years may be over.
NEW YORK (CNNMoney.com) -- National home prices may be on the road to recovery.
After three years of declines, home prices increased 2.9% in the three months ended June 30, according to the latest S&P/Case-Shiller report. That is the first quarter-over-quarter improvement in three years.
Prices in the national index are down 14.9% compared with the second quarter of 2008, the report said. But that is better than the record 19.1% decline that was set in the first three months of 2009.
"We're seeing some positive signs," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's.
The Case-Shiller 20-city index rose quarter-over-quarter by 1.4% but fell 15.4% year-over-year. Still, that was a smaller loss than analysts were predicting: A consensus of experts compiled by Briefing.com had forecast a 16.4% drop
"This is great news; prices may be starting to grow again" said Pat Newport, a real estate analyst for IHS Global Insight. "Three independent sources, the National Association of Realtors, the Federal Housing Finance Agency and Case Shiller are showing price increases."
The slide may be over partially because prices have reached affordability levels not seen in a generation, drawing many buyers into the market.
Helping housing markets, too, is the government economic stimulus effort, which includes an $8,000 first-time homebuyers tax credit. That added discount has spurred many entry-level buyers into homeownership.
The rebound may mean that potential homebuyers will have more of a feeling of urgency, afraid that they'll miss the market bottom.
That's already happening in some of the markets that had gone through steep price declines over the past few years, such as the area east of Los Angeles that went through a severe boom and bust cycle. Home sales there are now booming again, according to Chuck Whitehead, a Coldwell Banker real estate broker.
"There's such a frenzy to get in before prices go up again," he said. "Buyers are more concerned about that than about getting the first-time homebuyers tax credit."
Among cities, Cleveland reported the biggest rebound during the three months; prices improved by 4.2%. San Francisco prices rose 3.8% and Minneapolis 3.1%. Prices declined in only two of the 20 cities, Las Vegas, down 2%, and Detroit, down 0.8%.