The Case-Shiller index of home prices in 20 different markets rose briskly in June, according to Standard & Poor’s. This may give a nice boost to the stock market but it’s a pretty meaningless statistic because the data is two months old. That puts it right at the tail end of the buying flurry that came with the Homebuyer Tax Credit. Though the credit required that homebuyers have a signed contract by the end of April, they had another two months to close the deal. Thus June becomes the busy wind-up month for the credit. And guess what happened when the credit officially expired. That’s right, we saw that stunning decline in existing home sales in July. When the prices are released for July expect to see the wind come out of the sails.
Here is the text of the Case Shiller report:
Data through June 2010, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index rose 4.4% in the second quarter of 2010, after having fallen 2.8% in the first quarter. Nationally, home prices are 3.6% above their year-earlier levels. In June,17 of the 20 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. Housingprices have rebounded from crisis lows, but other recent housing indicators point to more ominous signals as tax incentives have ended and foreclosures continue.
All that said, there is a bottom taking shape in housing in most areas of the country. Darius Bozorgi, President of Veros, a realty tracking firm, was telling Bloomberg this morning that his firm expects to see depreciation in home prices over the next 12 months, but beyond that point there should be improvement. The one area that may continue falling due to a huge inventory glut is Florida, he said.
Even though it’s a bit of a (federal stimulus) mirage, the improvement in home prices is nice to see, and certainly better than if the tax credit had not lifted prices. Here is a chart of the Case-Shiller home price changes for both its 10-city and 20-city markets: