Home price declines eased in April when compared to the previous month, according to the most recent data released by the S&P/Case-Shiller 20-city home-price index. This increase in home prices have many hoping that home prices have finally bottomed out and are on their way up. One hurdle that must be overcome before actual recovery is seen in the housing market is the tens of thousands of foreclosures that are going to hit the market. Those foreclosures coupled with faltering consumer confidence will likely keep home prices low for the rest of the year.
According to the S&P/Case-Shiller 20-city home-price index, which tracks home prices in 20 major metropolitan areas across the nation, home prices increased by 0.7% nationwide for the month of April when compared to March. However, if home prices were adjusted seasonally, there would have been virtually no change from March to April. While this data doesn’t necessarily mean that the housing market is recovering, it indicates that the past year of declines might be ebbing.
While the price increases during the month of April where not dramatic, there was significant improvement the share of sales that were not foreclosures. Bank owned foreclosures and distressed sales have an impact on home prices because they are often sold at huge discounts to cash buyers, traditional home sellers are unable to compete with these discounts. Some economists believe that the warm weather is bringing buyers of existing and new homes; bringing a larger share of those types of sales to the market will help stabilize home prices.
In the 20 metropolitan areas tracked, 13 had an increase in home sales when compared to the previous month on a non-seasonally adjusted basis. Washington had an increase of 3% while San Francisco, Atlanta, Seattle, Denver, Cleveland, Minneapolis and New York all reported significant gains from the previous month. After prices were seasonally adjusted, 8 of the 20 cities reported gains.