Home prices held steady over the summer but may resume descent
U.S. home prices appear to have stabilized over the summer but are likely to renew their decline without an improving job market.
That was the view of many economists Tuesday after the fourth consecutive monthly increase of a closely watched index of home prices.
The Standard & Poor’s/Case-Shiller index of 20 American cities was up 0.9% in July over June but down 4.1% from July 2010. The month-over-month bump is probably the result of the boost the housing market gets over the summer, economists said.
“This effect will fade soon because sales have dropped back in recent months,” Ian Shepherdson, chief U.S. economist for High Frequency Economics, wrote in a note to clients.
David Blitzer, chairman of the S&P index committee, said that a recovery was a long way off.
“Continued increases in home prices through the end of the year and better annual results must materialize before we can confirm a housing market recovery,” Blitzer said.
Earlier this year the index fell below its previous bottom hit in April 2009, confirming a much-feared double dip in the housing market. With the four consecutive months of gains since then, the index has bounced back, but some economists predict prices will drop again in fall and winter.
All three California cities in the index posted minor month-over-month gains. Los Angeles was up 0.2%, San Diego rose 0.1% and San Francisco climbed 0.3%.
Home prices in the California cities are comparatively healthy despite the state’s high jobless rate because the markets tracked by the index are close to key job centers such as Hollywood and the Silicon Valley and are also near the ocean, where overbuilding was relatively constrained. The index does not track prices in California’s Central Valley or the Inland Empire, where housing is still weak.
The Case-Shiller index also includes data that are adjusted for seasonal variations, but the experts who publish these numbers have cautioned that the large number of foreclosures on the market have distorted the statistics. The adjusted data showed the index was flat from June to July.