Declining home prices have been the trend for a while now, but we’re seeing a temporary change. On a monthly basis home prices climbed in April and May, according to a widely followed measure of housing prices. The trend is expected to reach a third gain, which should provide the ailing housing market with hope.
For two months back-to-back home prices saw a small increase.
Investors should remain cautiously optimistic, however, the better gauge of where prices are headed is the yearly change in the index, and things aren’t going so well here. Prices dropped 0.6% from the first quarter, representing a drop of 5.9% from last year’s second quarter, while the monthly rise was of 0.9%.
The Case-Shiller index should reflect those numbers. Yearly, prices continue to decline. Monthly gains are a good sign but do not reflect the norm. Last year the pattern was the same, a price rise into the summer that fell later in the year.
The index released in June should show the largest month over month increase in over a year, while staying well under levels seen in June of 2010. The decline is expected to occur again in two or three months.
Any increases that may continue in the Case-Shillers index would only be minor improvements. Home prices are now only a third from their peak, and it will be a while before the market bounces back from that. Rebounding is made even more difficult by the scarcity of buyers despite falling prices and low interest rates.
The problem may spur Washington to propose new support measures for housing. Of course, the issue is that these may only put more housing losses off on taxpayers and still fail in restoring prices.
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