Its 10 city composite index increased 0.8% in April from the previous month and the 20 city index inched up 0.7%. However, both indices remain lower than a year ago, with the 10 city down 3.1% and the 20 city composite 4% lower than April 2010.
‘In a welcome shift from recent months, this month is better than last. April's numbers beat March. However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the spring summer home buying season. It is much too early to tell if this is a turning point or simply due to some warmer weather,’ said David Blitzer, chairman of the index committee.
After peaking in the summer of 2006, the S&P/Case-Shiller home prices indices are down 32.6% for the 10 city and 32.8% for the broader composite through April. From the trough seen in April 2009, the 10 city index is up 1.4% and the 20 city is up just 0.7%, according to S&P.
Lower priced homes sold less well than the middle and higher priced homes in April, Blitzer said. He added that seasonally adjusted numbers indicate some of the monthly increase is attributable to the season, but not all of it.
‘Other housing statistics show the same trends. Single family housing starts were up in May, but still well below their 2010 levels and still very close to their 30 year low. Existing home sales rose in May, but are still about 15% below last year’s pace and about 35% below their 2005 pace,’ he explained.
He said foreclosures continue to dominate the market in many areas of the country, yet the pace of defaults has decreased since November. Blitzer also said tightened lending standards hinder home sales as mortgages are harder to get despite historically low interest rates.
Analysts at both Bank of America Merrill Lynch and Capital Economics are forecasting another 3% fall for house prices before they reach a bottom at the end of the year.
While homes on the lower-tier price range will get there faster and at a much harder fall, a housing recovery is in sight, analysts said.
Paul Dales, senior US economist for Capital Economics, said there are no signs credit criteria for first time home buyers is loosening and the foreclosure rate on subprime loans, 14.7%, far outpaces the 3.5% foreclosure rate on prime loans.
BofAML analysts said house prices will move slightly higher in the months ahead because of the more heated home buying season. But they are also warning that prices could head down again to a bottom in late 2011 or early 2012, some 3% below the level in the first quarter of this year.
