U.S. metro home prices climb, Chicago at 2002 level

By Reuters
Posted June 29, 2010 at 8:13 a.m.

Single-family home prices unexpectedly climbed in April from March, driven by a final sales push before tax credits expired, but signs of a sustained recovery have yet to emerge, Standard & Poor’s/Case Shiller home price indexes showed on Tuesday.

In the Chicago area, April home prices were relatively flat, rising 0.6 percent since April but still down 1.6 percent form April 2009. Area home prices are at levels similar to what the market saw in May 2002.

“Inventory data and foreclosure activity have not shown any signs of improvement,” David Blitzer, chairman of S&P’s index committee, said in a statement. “Consistent and sustained boosts to economic growth from housing may have to wait to next year.”

The S&P composite index of home prices in 20 metropolitan areas for April rose 0.4 percent on a seasonally adjusted basis after a downwardly revised 0.2 percent drop in March, compared with a 0.1 percent decline forecast in a Reuters survey. March prices were previously reported as unchanged.

On an unadjusted basis, prices gained 0.8 percent in April following March’s 0.5 percent drop. A 0.2 percent rise was forecast in a Reuters poll.

The 20-city index rose 3.8 percent in April from a year earlier, topping the expected 3.4 percent increase.

Home sales have fallen precipitously in the the weeks since the April 30 end of tax credits of up to $8,000, which pushed sales forward as buyers raced to lock in the incentive.

Other reports have shown sales of new homes sank by a record 32.7 percent in May to the lowest level since record keeping began in the early 1960s, and existing home sales unexpectedly fell 2.2 percent in May.

Applications to buy homes hover at 13-year lows.

Still, affordability is high, with prices down around 30 percent on average from 2006 peaks and mortgage rates touching record lows near 4.75 percent.

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  1. Lucid Realty June 29, 2010 at 10:22 a.m.

    Doesn’t look like this made it through the first time. When comparing the index to its long term trendline you can see that we are about 15% below trend right now. See the first graph on this page:

  2. dss36 June 29, 2010 at 4:01 pm

    Don’t worry. They’re only at 2002 levels momentarily, they’ll sink to lower levels shortly.

    What Lucid Realty fails to consider is that a trend line – if it’s to be worth anything – presumes constant economic conditions. If the economic conditions change, the trend line is useless.

    And boy, have the economic conditions changed. Inflation adjusted incomes have been flat since the late 90s. Personal debt levels have skyrocketed. We have 10% unemployment and little hope for a quick economic recovery. Fear abounds in the markets; the DOW lost nearly 300 points today.

    So, instead of Mr. Realty’s trend line, I’d recommend a sobering look at REALITY’s trend line. Home prices are only starting to fall in line with the underlying economic fundamentals. Buyer beware!