Home prices rose for the third consecutive month in July according to a report released Tuesday.
Home values, as measured by the popular S&P Case-Shiller home price index of 20 cities rose 1.6 percent in July from a month earlier. Home prices also rose in June and May on a month over month basis. The three-month steady improvement in home values indicates that the housing markets may be stabilizing.
Home prices were down 13.3 percent compared to July 2008. Although home values fell from a year ago, the rate of decrease was slower than the 15.4 percent annual decline registered in June. The Case-Shiller home price 20-city index has tumbled 30.6 percent from its 2007 peak.
The home price report was welcomed news to the housing markets. The pace of annual decline in home values continues to decelerate. And even more encouraging, according to a statement by David Blitzer, chairman of the Index Committee at Standards & Poor’s, is that: “we now seem to be witnessing some sustained monthly increases across many of the markets.”
The Case-Shiller home price index is considered a more accurate measure of home price changes compared to the National Association of Realtors median home prices which can be skewed by changes in the mix of homes sold during the period. The Case-Shiller index measures the change in sales price of a particular home to its price the last time it was sold.
The Case-Shiller 20-city home price index for July exceeded expectations of most market experts. A panel of industry experts surveyed by Briefing.com had forecast a 14.2 percent year over year price decline, compared to the reported 13.3 percent.
Recent home price improvements are primarily due to modest, but steady, monthly increases in existing and new home sales over the past six months. In addition, existing and new home inventory levels have dropped considerably, relieving some downward home price pressures.
Looking forward, most housing economists remain cautious. An expected increase in foreclosure filings due to rate resets on option ARM and interest only mortgage loans threaten to exert downward pressure on home values. Foreclosures usually sell at 15 to 20 percent discounts compared to traditional home sales. Further, the housing pundits also worry about the elimination of the $8,000 home purchase tax credit, which also could reduce the number of future home sales.