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Home prices at post-bubble lows but may point to market stability

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Home prices in the U.S. ended the first quarter at their lowest point since the housing crisis, with values in 20 major cities dropping 2.6% in March compared with the same period a year earlier.

The gauge is currently down about 35% from its peak before the bubble burst in 2006, according to the Standard & Poor's/Case-Shiller index. The decline is “disappointing,” said David Blitzer, chairman of the S&P's index committee.

But the pace of the slump is the slowest since Dec. 2010. In February, the 20-city composite had dropped 3.5%.

Home values in 13 cities dipped year-over-year, according to the report. In California, values slid 4.8% in Los Angeles, nearly 3% in San Francisco and 2.7% in San Diego. Atlanta suffered an 18% plunge, reaching new lows along with Chicago, Las Vegas, New York and Portland, Ore.

That’s an improvement, however, from the nine cities that reported lows in February, according to the composite. And the majority of large U.S. cities -- 12 of the 20, led by Phoenix, Seattle and Dallas -- saw home prices rise in March from February.

“The housing situation in the United States, while certainly not booming, is seeing some stability and possibly some gains,” Blitzer said in a conference call with reporters.

The index, created by economists Karl E. Case and Robert J. Shiller, is widely considered the most reliable indicator of home values. The measure compares the latest sales of detached houses with previous sales and accounts for factors such as remodeling that might affect a house's sale price over time.

Analysts believe the data could signal stability in the turbulent housing market, if not a nascent turnaround.

Sales of existing and new homes are up, as are housing starts, permits and builder confidence, according to recent findings. Vacancy and foreclosure rates are losing steam; mortgage rates are at record lows.

But they’re figures “you want to take with a grain of salt,” Case said. “They look good, but they’re not great relative to history.”

And because the Case-Shiller index is measured as a three-month average, “it might be the last of the closely-followed home price figures to reflect a turning point,” wrote Credit Suisse analyst Jonathan Basile in a report.

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