According to the latest figures from the Case-Shiller Home Price Index, seasonally adjusted home prices rose again in July.
That marked the third straight monthly gain for the heavily watched index, which gauges home prices in 20 U.S. cities.
However, beneath the cheery headlines there was this downer….
Compared to July 2008, home prices are still down 13.3% year over year. That’s the cold hard reality that most people would just as soon ignore.
So instead, we’ve gotten the news today with a heavy dose of bullish spin…..
From Bloomberg by Bob Willis and Shobhana Chandra entitled: U.S. Economy: Home Prices Increase by Most Since 2005.
“Home values in 20 U.S. cities climbed in July by the most in almost four years, helping stem the record plunge in household wealth that’s depressed spending.
The S&P/Case-Shiller home-price index rose 1.2 percent in July from the prior month, the biggest gain since October 2005, the group said today in New York. Another report showed consumer confidence unexpectedly fell in September, while holding above the record low reached earlier this year.
Home values are rebounding as low borrowing costs and government tax credits lift home sales. Combined with rising stock prices, the gains will begin to restore the $13 trillion plunge in net worth caused by the worst financial crisis since the Great Depression, a process that economists such as Brian Bethune say will take years to complete.
Home prices are “a major, major turning point for the economy,” said Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts. “We are eating away at the problem of household balance sheets.”
The measure was forecast to fall 14.2 percent, according to the median projection of 36 economists surveyed by Bloomberg News. Estimates ranged from declines of 12.5 percent to 15 percent. It was down 15.4 percent in the 12 months ended in June.
Compared with the prior month, 17 of the 20 cities covered showed an increase, led by a 3.1 percent jump in Minneapolis and a 2.9 percent increase in San Francisco. Las Vegas suffered the biggest one-month decrease at 1.9 percent.
Combined sales of new and existing homes have risen for four out of the last five months, signaling the worst of the housing crisis is over.
‘In the third quarter we started to see some real signs that the housing market is in fact starting to stabilize,’ Stuart Miller, Lennar’s chief executive officer, said on a Sept. 21 conference call. ‘The sense that now is the time to buy is starting to gain momentum.'”
Now is the time to buy huh?
Somehow I suspect that’s Stuart Miller’s answer every time he gets that question…sort of like parrot.
As for what we can expect from Case-Shiller next month, it looks like the bullish streak in home prices might finally be broken in August.
According to the National Association of Realtors, sales of existing homes dropped 2.7 percent in August while the median sales price fell to $177,700—-a 12.5% drop from a year ago.
That friends is the unvarnished truth.
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