Home Prices Up Nearly 3 Percent in Second Quarter

U.S. home prices rose nearly 3 percent in the second quarter of the year, the first quarterly gain in housing prices in nearly three years, according to the latest Standard & Poor's/Case-Shilling Home Price Index.

Although housing prices remain well below their mark of one year ago, the data provides further evidence that the housing market is turning around. Average home prices rose for the second consecutive month in June, up 1.4 percent over their levels in May, with 18 of the 20 U.S. metropolitan areas surveyed showing price gains.

"For the second month in a row, we're seeing some positive signs," said David M. Blitzer, chair of the Standard & Poor's Index Committee. "The U.S. National Composite rose in the 2nd quarter compared to the 1st quarter of 2009. This is the first time we have seen a positive quarter-over-quarter print in three years."

Blitzer said there are signs of an upturn in both the seasonally adjusted and unadjusted data, although some of the hardest-hit cities, particularly in some parts of the Sun Belt, continue to show weakness.

Overall, average U.S. home prices posted a one-year decline of 14.9 percent from the second quarter of 2008. Many economists prefer to focus on annual changes, rather than month-to-month or quarterly changes, in order to eliminate seasonable variability and to identify long-term trends.

In those terms, the annual rate of change was an improvement over the 19.1 percent annual decline represented in the first quarter of the year. Both figures are strongly influenced by the sharp declines in housing prices that occurred in connection with the collapse of credit markets last fall.

Average U.S. home prices are now at the same level they were at in late 2003, according to the survey.

In individual housing markets, Cleveland posted the strongest monthly gain of 4.1 percent, followed by San Francisco at 3. 8 percent and Minneapolis at 3.1 percent. Las Vegas and Detroit were the only metropolitan areas of the 20 surveyed to post declines in June, of 2.0 percent and 0.8 percent respectively.

For the year, housing prices in Las Vegas posted the biggest declines, down 32.4 percent from June 2008, followed by Phoenix at 31.6 percent and Detroit at 25 percent. Although all metropolitan areas posted annual declines, the best-performing markets were Dallas, Cleveland and Denver, which posted declines of 2.2 percent, 3.0 percent and 3.6 percent, respectively.

The Standard & Poors/Case Shilling Home Price Indices are based on monthly surveys of arms-length sales of single-family homes in 20 major U.S. metropolitan areas each month.