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Published: Tuesday, 8/28/2012 - Updated: 1 year ago

Home prices in 20 big cities show gains in 1-year period

ASSOCIATED PRESS
Denver, where this house is for sale and where sales have increased monthly since February, is reflective of indications that the U.S. housing market may be on the mend. Denver, where this house is for sale and where sales have increased monthly since February, is reflective of indications that the U.S. housing market may be on the mend.
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WASHINGTON -- U.S. home prices are finally starting to increase consistently.

Prices as measured by the Standard & Poor's/Case Shiller index rose in June compared with the same month last year, according to a report released Tuesday. The year-over-year increase was the first since September, 2010, a year when housing benefited temporarily from a federal home-buying tax credit.

The report noted that all 20 major metropolitan areas tracked by the index posted gains in June from May. That's the second straight month in which prices rose in every city tracked. Toledo is not among the cities in the index.

The S&P/Case-Shiller 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 June figures are the latest available.

"I think we have turned the corner on prices," said David Blitzer, chairman of the S&P's index committee. "It looks very good."

A decline in foreclosures and the lowest mortgage rates in decades have helped some cities hardest hit by the housing bust. Prices have surged nearly 14 percent, for example, in the Phoenix area in the 12 months ending in June.

Prices still have a long way to go to recover from the plunge during and after the housing bubble burst in late 2006 and early 2007. Nationally, June prices were 31.6 percent below the peak hit in April, 2006, based on the S&P/Case Shiller index.

Some markets may have yet to bottom. Prices in Atlanta fell 12.1 percent in June compared with June, 2011. Las Vegas home prices dropped 2.1 percent in that period. Prices in both cities are consistent with 1998 levels.

The price increases are helping bolster a housing recovery that began earlier this year. Last week, the National Association of Realtors said sales of previously occupied homes rose 10 percent in July compared with July, 2011.

Builder confidence rose this month to its highest since the market bust five years ago. And the average rate on a 30-year fixed mortgage has been below 4 percent all year.

As prices rise, more Americans may be inclined to put houses up for sale. That could further energize the market, which has been hampered by a low home supply. "The best news on the housing front is that prices have turned," said Patrick Newport, U.S. economist at IHS Global Insight.

Mr. Newport said rising prices could help Americans who owe more on mortgages than their homes are worth now. And it could boost consumer spending if people feel wealthier. Consumer spending accounts for about 70 percent of economic activity.



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