March 30, 2010, LA Times
Home prices in 20 U.S. cities unexpectedly rose in January, indicating the housing market is stabilizing as the economy expands.
The S&P/Case-Shiller home-price index climbed 0.3 percent from the prior month on a seasonally adjusted basis after a similar gain in December, the group said Tuesday. The gauge was down 0.7 percent from January 2009, the smallest year- over-year decrease in three years.
Cheaper homes, low borrowing costs and government incentives are combining to support the housing market, which helped trigger the worst recession since the 1930s. A lasting recovery requires gains in hiring that may help stem foreclosures, easing the pressure on prices and giving Americans the confidence to spend.
“Housing is off the bottom, and home prices are finding a bottom,” said Stuart Hoffman, chief economist at PNC Financial Services Group. “Prices aren’t free-falling anymore.”
Seasonally adjusted home prices were forecast to fall 0.3 percent from the prior month, according to the median forecast of 18 economists surveyed by Bloomberg News. Estimates ranged from a decline of 0.8 percent to a gain of 0.2 percent.
The gauge was projected to drop 0.7 percent from January 2009, according to the survey median, following a 3.1 percent decrease in the 12 months ended in December. Year-over-year records began in 2001.
“While we continue to see improvements in the year-over- year data for all 20 cities, the rebound in housing prices seen last fall is fading,” David Blitzer, chairman of the index committee at S&P, said in a statement.
Compared with the prior month, 12 of the 20 areas covered showed a seasonally adjusted increase. Los Angeles had the biggest gain from December, rising 1.8 percent.
Some recent industry reports have indicated renewed price pressure. Twelve cities, including Boulder, Colorado, and Providence, Rhode Island, are showing extended declines in housing values, reversing signs of a recovery that began last year, according to Seattle-based Zillow.com, a real estate information provider.
The number of markets in a “double dip” jumped in January from five a month earlier, said Zillow, which defines a double dip as five consecutive price drops after at least five straight monthly increases. The gains must have been preceded by a period where values fell in at least 10 of 12 months.
One reason home values are depressed is that foreclosed houses are adding to inventory of unsold homes, which compete with more expensive new housing.