AP - In this Sept. 22, 2009 photo, builder Jean Gagnon cuts siding panels while completing a new home in ...NEW YORK (AP) -- Home prices rose again in July, new data Tuesday showed, a trend that will help ease the foreclosure crisis and slowly rebuild the wealth of millions of American homeowners.
The new direction for home prices, which declined for 36 months before turning around in June, reflects an increase in demand from homebuyers. Home resales have climbed for four of the past five months, driven by low mortgage rates, a tax credit for new owners and low-priced foreclosures.
Sales of newly built homes are up 30 percent from the bottom, but are off about 70 percent from the peak of four years ago. Sales of previously owned homes are nearly 14 percent higher, but are still down nearly 30 percent from their peak.
The Standard & Poor's/Case-Shiller home price index of 20 major cities rose 1.2 percent from June to a reading of 143.05, according to the seasonally adjusted data. Though home prices are still 13.3 percent below July a year ago, the annual declines have slowed in all 20 cities for the sixth straight month.
"No matter how you measure it, house prices looked to have bottomed, which is the much-needed ingredient required to bake this housing market recovery," wrote Jennifer Lee, economist at BMO Capital Market.
The index has risen at an 8 percent annualized rate in the three months to July, the best performance since early 2006, noted Ian Shepherdson, chief U.S. Economist for High-Frequency Economics.
The index, however, is down about 30 percent from the peak in mid-2006 and some analysts are calling for additional price declines over the next year, though more moderate than previously forecasted. And 16 million homeowners owe more on their mortgages than their homes are worth. Those homeowners are more likely to go into foreclosure if they lose their jobs because they can't sell unless their lenders agree to take the losses.
Fannie Mae said Tuesday nearly 4.2 percent of its home loans were at least three months delinquent in July, up from 3.9 percent in June.
Home prices are now at levels not seen since the third quarter of 2003. And prices in Las Vegas, Detroit and Seattle are still falling, on a seasonally adjusted basis.
Prices in Las Vegas, one of the most speculative markets during the boom, are down more almost 55 percent from their peak. In August, almost 80 percent of home resales in Nevada were either a foreclosure or a sale below the value of the mortgage, according to a survey by the National Association of Realtors.
The Detroit housing market is reeling from layoffs in the automotive industry. Seattle, by contrast, was one of the last areas to enter the downturn so prices there have yet to hit bottom.
And there are still several risks to the national housing recovery, including rising unemployment and foreclosures and the expiration of a tax credit for first-time homebuyers.
First-time homeowners can qualify for a tax credit worth 10 percent of the purchase price, up to $8,000, but it expires at the end of November. More than a dozen bills to extend the credit have been introduced in Congress, but it's unclear if lawmakers want to continue subsidizing the real estate market.
Real estate agents and homebuilders are lobbying hard for an extension. They point to continued areas of weakness, such as foreclosures, which now are being driven by job losses, which are also weighing on the minds of consumers. The Conference Board said Tuesday that its Consumer Confidence Index dipped unexpectedly this month to 53.1 after three months of gains, down from the revised 54.5 reading in August.
Nevertheless, there are clear positive trends in the housing markets. Home prices rose in 13 metro areas for at least three straight months. The biggest gains in July were in Minneapolis, San Francisco and Chicago.
Agents in those three cities say prices are stabilizing because there are fewer foreclosures and less inventory overall. Lower priced homes are also getting multiple bids.
"Now we're seeing standard sales ticking up and foreclosure sales are way down," said real estate agent Barb Van Stensel of Keller Williams Lincoln Square.
The Case-Shiller indexes measure home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.
By J.W. Elphinstone, AP Real Estate Writer
On Tuesday September 29, 2009, 2:13 pm EDT
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