Home prices continue rebound from February’s record lows
Is it possible that home prices bottomed out last winter and have finally turned around?
Perhaps. But we’ve been here, and been disappointed, before.
One of the most closely watched measures of property values, the S&P/Case Shiller Composite Index, gained 0.9% from April to May.
Prices in all 20 cities the index follows rose from April to May, and half of those 20 cities are now posting year-over-year increases (based on non-seasonally adjusted data.)
The biggest improvements are in Phoenix (up 11.5% over May 2011), Minneapolis (up 4.7%) and Dallas (up 3.8%).
Phoenix “was one of the hardest-hit cities in the collapse, and prices are still more than 50% below their June 2006 peak,” David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, noted in a statement, “but the past five months have been positive for that market.”
Atlanta continues to suffer the largest year-over-year decline (14.5%), although prices there grew by a healthy 4.0% from April to May.
Unfortunately, the S&P/Case Shiller Composite Index had appeared to bottom out three previous times since 2009.
But each time the rebound fizzled and prices fell again, reaching a record low in February.
The current rebound has pushed the national average home price back to where it was in spring 2003, but that’s still about 35% lower than its peak in the summer of 2006.
“We have observed two consecutive months of increasing home prices,” Blitzer said. “However, we need to remember that spring and early summer are seasonally strong buying months.”
We’ll need to see those trends continue for many more months before we can be assured that the housing market is indeed recovering and won’t sag again.