Home Prices Up, But Trend Uncertain

By:: Peter King | March 31, 2010

Home prices rose in January, according to a leading survey, although not enough to blunt concerns over signs of renewed weakness in the housing market.

Prices rose by a seasonally adjusted 0.3 percent for the month, according to the Standard & Poor’s/Case Shiller Index of 20 major metropolitan housing markets, matching December’s increase. On an annual base, January’s figures represented only a 0.7 percent decline from January 2009, the smallest annual rate of decline in three years.

However, in unadjusted terms, prices fell by 0.4 percent in January, which is typically a weak season for the housing market.

“The report is mixed,” said David M. Blitzer, chair of the Index Committee at Standard & Poor’s.” While we continue to see improvements in the year-over-year data for all 20 cities, the rebound in housing prices seen last fall is fading.”

Blitzer said that the number of cities posting monthly price gains declined in January, while four of them – Charlotte (N.C.), Las Vegas, Seattle and Tampa – hit new low marks for the period following the financial crisis.

“Other recent data on housing also paint a mixed picture,” Blitzer said. “Housing starts continue at extremely low levels, recent reports of home sales suggest the market remains difficult, and concerns remain about further foreclosures and a large shadow inventory of unsold homes.”

He acknowledged that the current data comes during a traditionally weak season for the housing market, but concluded it shows the housing market is not yet out of the woods.

The most positive ongoing sign from the survey is that the annual rate of change, expressed as an increase or decline in prices from 12 months before, has been steadily improving since early last year, when it bottomed out at around an 18 percent annual rate of decline.

At the same time, unadjusted prices have stagnated in recent months after turning up sharply in early 2009. Based on the 20-city sample, prices are now at the same level that they were in August 2003.

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