Housing market gets a reprieve as home prices slightly improve

Tuesday, August 31st, 2010 By

Forest Fire

The real estate market hasn't completely burned to the ground. It's showing some signs of life. Image from Wikimedia Commons.

There doesn’t seem to be a lot of good news when it comes to real estate in the U.S. However, there is a scant glimmer of hope amid the doom and gloom. It turns out that U.S. home prices have been rising, if only slightly, for the last few consecutive months. The Case Shiller Price Index has been showing slight upward trending of home prices, and a gain was recorded across 20 cities for homes sold between May and June 2010. Some good news is appreciated, as real estate is one of the most depressed markets in the U.S. currently.

Slight gain in home prices

Standard & Poor’s Case Shiller price index, which tracks real estate activity in 20 cities, has showed a gain in home prices in the second quarter of 2010. According to the New York Times, the second quarter posted a 4.4 percent gain in home prices. The first quarter of this fiscal year saw a fall in home prices of 2.8 percent. Also, home prices for second quarter of 2010 are 3.6 percent higher than for second quarter of 2009. For July, home prices rose 1 percent over June.

There is a catch

Along with the rise in home prices, sales are trending downward. The homebuyer tax credit helped to spur home sales, but once the credit expired sales began to drop off. It’s likely that home prices will fall again. Economist Karl Case (for whom the index is named) said that while some of the data was positive, a stabilization of financial markets had not occurred yet, according to Bloomberg. Case thinks it will be another year or so before a more stable market emerges, and begins to grow again.

At least it was good news

The bottom line is that the homebuyer tax credit gave a temporary, which is to say artificial, boost to home sales, and also home prices. A truer state of the market can’t really emerge until governmental encumbrance has been removed. However, on the plus side, things are better than they were a year ago.

Sources

New York Times

Bloomberg

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