Residential real estate prices fell in April at the slowest pace in more than a year, adding to signs the U.S. housing market was firming.
The S&P/Case-Shiller index of property values in 20 cities dropped 1.9 percent in April from the same month in 2011, the smallest decline since November 2010, after decreasing 2.6 percent in the year ended March, the group said today in New York. The median forecast of 28 economists in a Bloomberg News survey projected a 2.5 percent drop.
A turnaround in prices is a necessary step toward luring more buyers and sustaining demand for housing, which is starting to stabilize after precipitating the last recession almost five years ago. Record-low borrowing costs, due in part to Federal Reserve efforts to hold down long-term rates, may keep promoting home sales in the presence of an 8.2 percent unemployment rate.
“Housing has picked up since the middle of last year,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York, who correctly forecast the monthly gain in prices. “Sales have improved and the inventory of homes for sale has been falling, which has brought a bit more balance into the market and fed into a bit of stabilization of prices.”
Estimates in the Bloomberg survey ranged from declines of 1.7 percent to 3.1 percent. The Case-Shiller index is based on a three-month average, which means the April data was influenced by transactions in March and February.
Stock-index futures extended earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in September rose 0.2 percent to 1,309 at 9:22 a.m. in New York.
Home prices adjusted for seasonal variations climbed 0.7 percent in April, matching the prior month’s gain, which was revised up from a previously reported 0.1 percent increase. It was the best back-to-back gain since mid 2009. Unadjusted prices increased 1.3 percent in April as 19 of 20 cities showed gains.
Phoenix showed the biggest adjusted monthly increase, with prices rising 2.5 percent from March. Detroit showed the biggest decrease at 2.1 percent.
The year-over-year gauge provides better indications of trends in prices, according to the S&P/Case-Shiller group. The panel includes Karl Case and Robert Shiller, the economists who created the index.
Ten of the 20 cities in the index showed a year-over-year decline, led by a 17 percent drop in Atlanta, the only city to show a double-digit decrease.
Phoenix showed the biggest year-over-year increase, with prices rising 8.6 percent in the 12 months to April.
“We finally saw some rising home prices,” David Blitzer, chairman of the S&P index committee, said in a statement. “While one month does not make a trend, particularly during seasonally strong buying months, the combination of rising positive monthly index levels and improving annual returns is a good sign.”
Prices may be on an upward trajectory as the glut of unsold houses that went on the market after the recession shrinks. There were 2.49 million existing homes for sale in May, down from an average supply of 2.93 million in 2011 and 3.22 million in 2010, data from the National Association of Realtors show.
The same NAR report indicated the median price of an existing home climbed 7.9 percent to $182,600 last month, the highest since June 2010, from $169,300 in May 2011.
“Nobody feels like prices are going down anymore,” Larry Nicholson, president and chief executive officer of homebuilder Ryland Group Inc. (RYL), said during a June 13 investor conference. “Everything we see now would tell us the second half of the year will be better than last year. We’re seeing the quality of the traffic pick up. We’re seeing new traffic. The business has gotten better and moving back towards a normalized process.”
Even so, Federal Reserve Chairman Ben S. Bernanke said last week the economy wasn’t getting a typical boost from a real estate recovery. To spur faster economic growth and more activity in housing, the central bank announced last week it would buy securities to extend the maturities of assets on its balance sheet, thereby lowering longer-term interest rates.Bloomberg Table
1-months 3-months 1-year 2-years 3-years
earlier earlier earlier earlier earlier ============================================================ US Composite-20 1.28% 0.41% -1.90% -6.06% -2.48% ————————————————————San Francisco 3.39% 3.78% -1.36% -6.84% 9.92% Washington DC 2.77% 2.33% 1.58% 1.00% 8.37% Phoenix 2.47% 6.00% 8.62% -0.95% 4.37% Atlanta 2.35% -1.10% -17.00% -20.05% -19.84% Cleveland 2.32% 1.38% -1.27% -7.56% -1.24% Portland 2.02% 1.28% -0.92% -10.00% -10.37% Seattle 1.99% 2.93% -0.96% -7.79% -10.40% Tampa 1.87% 2.67% 0.81% -7.02% -9.22% Dallas 1.70% 3.36% 2.82% -1.46% 1.89% ============================================================
1-months 3-months 1-year 2-years 3-years
earlier earlier earlier earlier earlier ============================================================ Denver 1.69% 2.30% 2.80% -1.37% 2.95% Charlotte 1.60% 2.42% 0.76% -4.19% -6.32% Los Angeles 1.53% 0.88% -3.57% -5.59% 1.76% San Diego 1.38% 2.02% -1.78% -5.97% 5.07% Chicago 1.12% -3.88% -5.63% -13.71% -15.08% Las Vegas 1.08% 0.65% -5.84% -11.65% -19.18% Boston 0.87% -0.45% 0.09% -4.15% 0.51% Minneapolis 0.51% -1.33% 3.80% -7.97% 1.12% Miami 0.40% 1.98% 3.17% -2.56% -3.05% New York 0.13% -1.87% -3.77% -6.60% -7.59% Detroit -3.62% -7.14% 1.23% -3.76% -6.66%