After nearly three years of declining home prices, the value of U.S. homes finally grew on a monthly basis in May for the first time in nearly three years, according to a 20-city index released this past week.
We had our first increase in the monthly index since July 2006, with
the index showing a month-over-month increase of 0.5%, according to the report from financial data company Standard & Poor’s and economists Case-Shiller.
Annually, home prices in the 20 cities have fallen 17.1%, but it was the second straight month that the year-over-year decline lessened.
According, to David Blitzer, chairman of the index committee S&P, “This could be an indication that home price declines are finally stabilizing.”
However, Robert Shiller, the Yale economist who co-founded the index, says that there has been a decrease in foreclosure sales and that this shows up in the index statistics as a plus for home prices. But added that foreclosures could increase again in the near furture, but the future does look encouraging. In fact, with recent efforts of the government, confidence is moving higher and we are beginning to see signs of recovery in other areas as well.
On the other hand, Paul Bishop, the managing director of research for the National Association of Realtors, was glad to see the upturn but did not want to overemphasize the results of a single month, saying the economy is not out of the woods yet.
“Job losses could continue after the recession ends,” he said. “That’s where the economy intersects with consumers in the most tangible way. Until consumers have some level of confidence that the economy is improving, many will be reluctant to buy.”
Where prices are heading from here is yet to be seen. However, with the price of homes in the current market, coupled with government intervention for modification for existing homeowners, tax credits for new homeowners and historically low interest rates, buyer activity has increased. More homeowners are now attempting to remain in their homes and new home buyers are trying to purchase homes. It will of course be very interesting to see where June and July’s numbers come out when released.