Home prices rise in most major cities in August

Home prices rise in most major cities in August
by Associated Press

Originally printed at http://www.katu.com/news/business/66415772.html

NEW YORK (AP) - Home prices rose for the third straight month in August, data Tuesday showed, a key ingredient for a broad and sustained housing recovery.

The Standard & Poor's/Case-Shiller home price index of 20 major cities climbed 1 percent from July to a seasonally adjusted reading of 144.5. While prices are down 11.4 percent from August a year ago, the annual declines have slowed since February.

The index showed a widespread turnaround with prices rising month-over-month in 15 metro areas since June. San Francisco, Minneapolis and San Diego led the way.

Prices are at levels not seen since August 2003 and have fallen almost 30 percent from the peak in May 2006.

Low prices and mortgage rates combined with a temporary tax credit for first-time buyers have spurred sales. Home resales climbed more than 9 percent in September, the largest amount in more than 26 years, the National Association of Realtors said last week. Sales figures for newly built homes are due out Wednesday.

"In general we view the latest (price) increase as positive, while also recognizing that there could still be some further price drops still to come," said Abiel Reinhart, an economist at JPMorgan Chase Bank, in a research note.

Zach Pandl, an economist at Nomura Global Economics, expects prices to fall to levels reached earlier this year, possibly reversing all of the gains of the summer.

"We need to see flat to rising prices in the winter months. That would be a very encouraging sign that prices have bottomed out," he said.

Economists are concerned the nascent trend in home prices cannot withstand falling consumer confidence, rising unemployment and foreclosures and the looming deadline for a first-time homebuyer tax credit.

Congress is debating extending a temporary tax credit that saves first-time buyers 10 percent of the sales price, up to $8,000. This week, top Democrats in the Senate pressed a plan that would prolong the credit but gradually phase it out over the next year.

Supporters will likely point to new data Tuesday that showed confidence about the U.S. economy fell unexpectedly in October. With job prospects bleak, the Conference Board's Consumer Confidence Index fell almost 6 points from September to the lowest level since May.

And home prices are not rising everywhere.

Prices in Las Vegas, Seattle and Charlotte, N.C., all fell to their lowest levels in August. Prices in Las Vegas have plunged by 56 percent since peaking in April 2006, the largest peak-to-trough decline of all 20 cities.