Spring is traditionally a strong season for home sales, and despite continued uncertainty in the economy, this spring was no exception, with housing prices up around the country, according to the S&P/Case-Shiller Index. June housing price levels rose in 18 of the 20 major metro areas followed by the index and are now up 6% from the lows of March 2012. But keep in mind that the market, as anyone who is involved in it knows, still has a long way to battle back, with current levels 31% off the real estate peak of summer 2006.
The Case-Shiller index is known for being variable, and the May seasonally adjusted increase appears to have been revised upward a smidge, to a pop of 1.0%. The seasonally adjusted composite increase of 0.9% in June, and the jump of 2.2% in the second quarter versus the first, are also positive news.
Whether this fire will continue given the last couple of weeks of interest rate increases, as mortgage rates have been jumping off their record lows, remains to be seen. For now, the year-over-year strength in Phoenix (up 13.9%), Minneapolis (up 5.7%), Miami (up 4.4%), Denver (up 4.0%), and San Francisco (up 3.0%) appears broad-based.
The market in Atlanta, where prices had been plummeting, is up 2.3% in June after posting a rise of 1.8% in May. Real estate in the city is still weak compared to last year (down 12.1%), but it appears that the free-fall has been arrested.
A couple of major metros seem to be down versus last year — New York has dropped 2.1% and Los Angeles is down 0.6% — but since S&P/Case-Shiller tracks single-family homes, that’s likely a data bias because the hotness of those cities’ apartment markets isn’t factored in. A recent report by appraiser and data provider Miller Samuel, for instance, notes that Brooklyn condominium prices were up 24.6% in the second quarter versus a year ago.
National price indexes for real estate other than S&P Case-Shiller have also looked quite positive. Last week, the National Association of Realtors reported its fifth straight monthly increase in the national median price, as that data point hit $187,300 in July, up 9.4% from the previous year. The Federal Housing Price Index, which throughout the housing crash has been measuring a less-bleak picture than Case-Shiller, was up 0.7% in June over May, and up 3.0% in the second quarter from a year ago.
Going forward, the variable in the market is interest rates. The Associated Press reports that the 30-year mortgage rate is at 3.66%, still amazingly low in historical terms, but marking four consecutive weeks of increases from the record low 3.49%. Ditto the 15-year mortgage rate, which is up from its record low of 2.8% to 2.89%. The Federal Reserve, which exerts control over interest rates through its activities in the market, has stated a goal of keeping long-term interest lows. As Reuters noted, investors will be eagerly watching Federal Reserve Chairman Ben Bernanke’s Friday speech at Jackson Hole to make sure that policy is being pursued.