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House prices firmed in May, confirming the end of an extended period of uninterrupted declines that spanned ten months. Federal Housing Finance Agency (FHFA) reported a 0.4 percent increase in the monthly purchase-only house price index (HPI) in May up to a seasonally adjusted level of 181.8-their second consecutive monthly increase. An increase in house prices was observed in six of the nine Census divisions. Solid gains in the HPI were observed in the Mountain (+2 percent) (Arizona, Nevada) and West North Central (+1 percent) (Michigan, Illinois, Ohio)-divisions where house prices continued to decline last month. The East South Central (+1.3 percent), South Atlantic (+0.9 percent), East North Central (+0.5 percent), and New England (0.2 percent) divisions built on their improvement from the previous month. No change was observed in the Pacific division index. The house price recovery wavered in the Middle Atlantic (-0.8 percent) (New York, New Jersey, Pennsylvania) and West South Central (-1 percent) (dominated by Texas) divisions, with declines that gave back most of the HPI?EUR??,,????'?????< With house prices firming at the division level, expect to see solid improvement in the HPI of most states. Firming house prices will support the long-awaited recovery in the housing sector. Expect house prices to remain stable at current levels for the balance of 2011, underpinning a steady improvement in both home sales and housing starts. |
