Home Prices Tick Up in April, Still Showing Large Year-Over-Year Losses

Home prices got a seasonal boost in April according to the latest S&P/Case-Shiller Home Price Index.  The Case-Shiller report is a three-month moving average with a two-month lag.

The 10- and 20-City Composites were up 0.8 percent and 0.7 percent (not seasonally-adjusted) from March to April.  This is the first increase seen in these indices in eight months. Both composites are down year-over-year, with the 10-City Composite falling 3.1 percent, and the 20-City Composite falling 4.0 percent from April 2010.

Right now home prices are hovering around the same levels that they saw in the summer of 2003.  Since the market peaked in summer 2006, the 10-City Composite is down 32.6 percent, while the 20-City Composite is down 32.8 percent.  Both indices are up slightly since the April 2009 low point, rising 1.4 percent and 0.7 percent respectively.

David M. Blitzer, the Chairman of the Index Committee commented:

“In a welcome shift from recent months, this month is better than last – April’s numbers beat March.  However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the Spring-Summer home buying season. It is much too early to tell if this is a turning point or simply due to some warmer weather.”

He continued:

“In the monthly details, we saw home prices increase in April over March.  The 10-City was up 0.8% and the 20-City rose 0.7%.  Only seven cities experienced lower prices compared to 18 in March. However, the seasonally adjusted figures saw less dramatic improvement. The annual rate of change for the 10-City remained the same at -3.1%; whereas the 20-City fell further from -3.8% reported for March to -4.0% for April.  For a real recovery we would need to see several months of increasing home prices, large enough to shift the annual momentum to the positive side.  In short, better news, but still a lot of questions and a long way to go.”

As Blitzer says, it is far too early to determine whether this increase is a trend, or just a temporary increase due to seasonal factors.  The most recent FHFA House Price Index also showed an increase for April, so the rise in prices is likely not due to the statistical vagaries of this report.  The housing market still suffers from a huge supply of unsold homes and a lack of demand for these homes. The jobless situation remains largely unimproved, with U-6 unemployment lingering around 9 percent for the past year now.  Foreclosure is still a huge problem.  Despite the rise in prices reflected in this report, it is tough for me to be anything but bearish on the housing market.