Glimmer of hope for home prices

The S&P/Case-Shiller Index, a leading indicator of U.S. housing prices, showed a 0.2% increase for its 10- and 20-city composites in August versus July 2011.  In addition, 16 of the 20 MSAs and both composites posted improved annual returns compared with July’s data; Los Angeles and Miami saw no change in annual returns in August, and Atlanta and Las Vegas saw their annual rates of change fall deeper into negative territory.

In year-over-year figures, the 10- and 20-city composites posted annual returns of -3.5% and -3.8% versus August 2010, respectively. At -8.5%, Minneapolis posted the lowest year-over-year return, but has improved in each of the last three months. Detroit and Washington, D.C., were the only two cities to post positive annual returns of 2.7% and 0.3%, respectively.

“In the August data, the good news is continued improvement in the annual rates of change in home prices,” said David Blitzer, chairman of the S&P Index Committee. “In spring and summer’s seasonally strong period for housing demand, we cautioned that monthly increases in prices had to be paired with improvement in annual rates before anyone could declare that the market might be stabilizing. With 16 of 20 cities and both composites seeing their annual rates of change improve in August, we see a modest glimmer of hope with these data. As of August 2011, the crisis low for the 10-city composite was back in April 2009; whereas it was a more recent March 2011 for the 20-city composite. Both are about 3.9% above their relative lows.

“The Midwest is one region that really stands out in terms of recent relative strength. Chicago, Detroit and Minneapolis have all posted very sharp monthly increases going back to May. These markets were some of the weakest during the crisis, particularly Detroit. But as of August 2011, Detroit is the healthiest when viewed on an annual basis. It is up 2.7% versus August 2010. Prices there are still back to their 1995 levels, but the recent pickup in the U.S. auto industry may finally be helping.”