U.S. single-family home prices rose in May from April, the first monthly increase in nearly three years, suggesting prices may be stabilizing, according to Standard & Poor’s/Case Shiller home price indexes Tuesday.
The annual rate of decline for the 10- and 20-city indexes improved for the fourth straight month, though prices have still tumbled by more than 32 percent from the peaks in the second quarter of 2006.
The index of 20 metropolitan areas rose 0.5 percent in May from April, after a 0.6 percent decline the month before, in contrast with the 0.5 percent drop forecast by economists in a Reuters poll.
The May monthly rise resulted in an annual downturn of 17.1 percent, although this was the fourth straight month that the rate of decline slowed. This follows a 16-month string of record annual declines starting in October 2007 and ending in January.
Maureen Maitland, S&P vice president of Index Services told CNBC Tuesday that the numbers do show a slight improvement in the housing market but there is still a ways to go.
“We are seeing some good numbers in sales and some recovery in housing, but home prices are still lagging and people don’t expect a full recovery until 2010,” said Maitland.
S&P said its index of 10 metropolitan areas rose 0.4 percent in May after a 0.7 percent drop in April, for an 16.8 percent year-over-year drop.
“To put it in perspective, this is the first time we have seen broad increases in home prices in 34 months,” David M. Blitzer, chairman of the index committee at S&P, said in a statement. “This could be an indication that home price declines are finally stabilizing”.
The 10 and 20-city indexes reported positive returns for the first time since summer of 2006.
“With the numbers we’ve seen on home sales starting to firm and now home prices stabilizing, we’re getting more evidence that the housing market may have hit bottom,” said Gary Thayer, senior economist at Wells Fargo Advisors in St. Louis, Missouri.
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