Case-Shiller: 18 of 20 Cities Report Higher Home Prices in July

Home prices continued to stabilize in 18 of the 20 metropolitan areas surveyed in July, an industry survey showed Tuesday. Thirteen of the 20 metro areas have seen prices increase for three or more consecutive months, indicating that the deflationary spiral in the housing market has likely come to an end. (Well, assuming you don't live in Las Vegas...)

“No matter how you measure it, house prices looked to have bottomed, which is the much-needed ingredient required to bake this housing market recovery,” said Jennifer Lee from BMO Capital Markets.

The S&P Case-Shiller Home Price Index said averages prices improved by 1.6% in July. That puts the annual decline in the 20-city composite at -13.3%, an improvement from the -15.4% print in June and the record -19.0% print in January. To put that in perspective, July’s prices are roughly similar to prices in the autumn of 2003.

“The rate of annual decline in home price values continues to decelerate and we now seem to be witnessing some sustained monthly increases across many of the markets” said David Blitzer, chairman of the S&P’s Index Committee.

Each of the 20 metro areas showed an improvement in the annual rates of decline. And when compared to June, only two cities ― Seattle and Las Vegas ― continued to see prices fall. The crisis is Las Vegas is particularly stark: since peaking in August 2006, home prices there have deflated 54.8%, including a 1.15% drop in July.

On average, prices in the 20-city composite have fallen 32.6% since peaking in Q2 2006. 

Looking ahead, Blitzer was generally optimistic that prices bottomed out earlier in the year, but there are still lingering concerns that the new floor could be broken once the government unwinds various incentive programs.

“These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer’s Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures,” Blitzer said.

TD economist Ian Pollick was similarly cautious on whether prices would continue to climb. 

“To the degree that the housing market was the culprit behind the entire credit crunch, it is encouraging to see another monthly improvement in the headline index,” he said. “However, the U.S. housing market still has a long way to go before fully cleansing itself.”