More Good News on House Prices

Despite the increase in April and May, the indexes are appreciably below their year-ago levels, with the Composite 20 down 4.5 percent and the Composite 10 off 3.6 percent from the May 2010 readings.

House prices continued to improve in May with Standard and Poor's reporting the second consecutive monthly increase in both Case-Shiller composite house price indexes (HPIs) in May. Case-Shiller Composite 20 (CS20) gained 1.1 percent (NSA) and the Composite 10 (CS10) was up 1 percent. This follows a 0.6 percent increase in both indexes in April, which was the first monthly increase since July 2010.

Prices improved in 16 of the 20 cities covered by the index on a non-seasonally adjusted basis. The greatest improvements were observed in Boston (+2.7 percent), Washington DC (+2.4 percent), Minneapolis (+2.6 percent), San Francisco (+1.8 percent) and Chicago (1.7 percent). Prices continued to fall in Detroit (-2.8 percent), Las Vegas (-0.9 percent) and Tampa (-0.6 percent). Phoenix was unchanged.

Of the 20 metropolitan areas covered by the index, Washington DC is the only city with a positive annual rate of change-up 1.3 percent. All others were down relative to May last year, with Minneapolis (-11.7 percent), Tampa (-9.5 percent), Phoenix (-9.5 percent), Detroit (-9.3 percent) and Portland (-9.1 percent) faring the worst.

These year-over-year declines, however, should be considered in context. House prices in May 2010 received a boost from the increased demand stimulated in the closing stages of the home buyer tax credit.

The increases are a positive signal that the price declines experienced in the post-tax credit period have subsided. Some markets seem to be moving up based on their own improving conditions.

- Courtesy of NAHB