WASHINGTON – Home prices rose in March from February in most major U.S. cities for the first time in seven months. The increase is the latest evidence of a slow recovery taking shape in the housing market.
The Standard & Poor’s/Case-Shiller home price index shows that prices rose in 12 of the 20 cities it tracks.
Three of the weakest markets showed signs of improvement. Prices rose in Tampa and Miami. They were unchanged in Las Vegas.
The biggest month-to-month increases occurred in Phoenix, Seattle and Dallas. Prices dropped the most in Detroit, Chicago and Atlanta.
Rising prices in most cities add to other encouraging signs of a housing rebound. Sales are up, mortgage rates are at historic lows, builders are more confident and the economy is adding jobs.
Still, even though 12 of 20 cities showed gains, the weaker cities weighed on Case-Shiller’s overall price index in March. The index edged down to its lowest level since the housing bubble burst.
At the same time, price declines have slowed, and a majority of markets are rising.
“This is relatively good news,” said David Blitzer, chairman of S&P’s index committee. “We just need to see it happen in more of the cities and for many months in a row.”
In part, the increases reflect the start of the spring selling season. The month-to-month prices aren’t adjusted for seasonal factors.
The S&P/Case-Shiller monthly index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The March figures are the latest available.
Over the past 12 months, prices have dropped nationally. But the declines have slowed. The 20-city index was 2.6 per cent lower in March than in the same month last year. That’s better than the 3.5 per cent year-over-year drop in February. And it’s the smallest annual drop since December 2010
Other measures of home prices have also improved. But the S&P/Case-Shiller index uses a three-month moving average that could take longer to signal greater improvement.
“It might be the last of the closely followed home price figures to reflect a turning point,” said Jonathan Basile, an economist at Credit Suisse.
In April, sales of both previously occupied homes and new homes rose near two-year highs. Builders are gaining more confidence in the market. They’re breaking ground on more homes and requesting more permits to build single-family homes later this year.
Long-term mortgage rates have never been lower. The average rate on the 30-year fixed mortgage fell to 3.78 per cent last week, the lowest since long-term rates began in the 1950s.
The pace of home sales remains well below healthy levels. Economists say it could be years before the market is fully healed.
Many people are having difficulty qualifying for loans. Or they can’t afford larger down payments required by banks. Some would-be buyers are holding off because they fear prices could keep falling.
A better job market has made more people at least open to buying. Employers have added 1 million jobs in the past five months, though the gains slowed in April and March. The unemployment has dropped a full percentage point since August, from 9.1 per cent to 8.1 per cent in April.
Economists estimate that employers will have added 160,000 jobs this month. The government will issue the May jobs report on Friday.