S&P/Case-Shiller: Modest Improvement In Q2

Data through June show that the national home price index rose 4.4% in the second quarter, after having fallen 2.8% in the first quarter, according to the S&P/Case-Shiller Home Price Indices released this week. Nationally, home prices are 3.6% above their year-earlier levels.

In June, 17 of the 20 metropolitan statistical areas (MSAs) covered by S&P/Case-Shiller Home Price Indices and both monthly composites were up, and the two composites and 15 MSAs showed year-over-year gains. Housing prices have rebounded from crisis lows, but other recent housing indicators point to more ominous signals as tax incentives have ended and foreclosures continue, analysts say.

In June, the 10-city and 20-city composites recorded annual returns of 5% and 4.2%, respectively. The two indices are reported at a monthly frequency, and after 16 consecutive months of improvement in their annual rates of return, June's figures were the first to moderate from their prior month's pace, pointing to a possible deceleration in home-price returns.

‘While the numbers are upbeat, other more recent data on home sales and mortgages point to fewer gains ahead,’ says David M. Blitzer, chairman of the Index Committee at Standard & Poor's. ‘Even with concerns about near-term developments, we recognize that the housing market is in better shape than this time last year.’

Home prices in three MSAs did not show improvement over May's numbers. The Las Vegas MSA fell 0.6%, and the Phoenix and Seattle MSAs were flat, Blitzer says. California cities, meanwhile, posted some of the strongest year-over-year gains.

‘Through the second quarter, 15 of the 20 MSAs and both composites have positive annual growth rates, and no market is registering a double-digit decline,’ Blitzer says. ‘The worry starts when you remember that the home-buyer tax credit has expired, foreclosures are still at high levels, and July data on home sales and starts were very, very weak.’

Blitzer calls the inventory of unsold homes and months' supply data ‘particularly troubling.’

‘If this relative weakness in demand continues, it will likely filter through to home prices in coming months,’ he says.

SOURCE: S&P/Case-Shiller Home Price Indices


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