Nineteen of the 20 cities tracked by the monthly Standard & Poor’s/Case-Shiller home price index saw price increases from March to April, as the housing market continues its sluggish crawl to recovery. The poor job market, however, hinders further economic growth.
Rising monthly index
That largest home price increase was in and Phoenix, where homes rose by 2.3 percent from March to April. San Francisco and Washington showed the next-largest price increases. Detroit was the only major market covered in the index that posted a price drop. Its prices fell by 2.1 percent.
According to the Federal Housing Finance Agency, overseer of Fannie Mae and Freddie Mac, home prices rose by 3 percent from April, 2011 to April, 2012.
Phoenix also had the greatest year-over-year increase, with prices going up by 8.6 percent.
“The combination of rising positive monthly index levels and improving annual returns is a good sign,” said David Blitzer, chairman of the S&P index committee
The number of homes available remains low. The number of previously-occupied homes for sale has decreased to levels not seen since 2006.
Increased interest in the market has prompted contractors to request the highest number of building permits in more than three years.
The Great Recession was precipitated by the bottom falling out of the housing market. Home prices need to come up in order to sustain demand in the real estate market. Home sales are on the rise partly because of efforts by the Federal Reserve to keep long-term mortgage rates at record lows.
About the index
The S&P/Case-Shiller monthly index tracks home prices in Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, Washington DC, Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland, Seattle, and Tampa. According to the index, it covers roughly half of the nation’s homes.
The index compares prices with those in January 2000, long before the mortgage crisis, and averages those numbers over three months.
Jobless numbers bog down recovery
Meanwhile, the unemployment rate continues to hover at 8.2 percent, holding back a quicker economic recovery. A modest average of 73,000 jobs were added monthly to the nation’s economy in April and May. A more-encouraging average of 226,000 were added each of the fist quarter of the year.
If the job market does not improve, some economists worry that it could bog down the housing market just when it is starting to gain strength. Last week, Federal Reserve Chairman Ben S. Bernanke said the economy wasn’t improving, in spite of improvements in housing. Meanwhile, the Federal Reserve continues to snatch up securities to keep long-tern interest rates low.