U.S. home prices hit six-month high

27 01 2010

U.S. home prices rose for the sixth month in November, fueled by tax credits for home buyers.

The Standard & Poor’s/Case-Shiller 20-city home price index inched up 0.2 percent to a seasonally adjusted reading of 145.49. The index was off 5.3 percent from November 2008, nearly matching analysts’ estimates that it would fall by 5.1 percent.

The index is now up more than 3 percent from its bottom in May, but still 30 percent below its May 2006 peak.

Tampa’s housing prices dropped 0.4 percent for November when compared with the previous month. That came after a 1.6 percent September-October decline.

Like Southwest Florida, Tampa is a market where sales of distressed properties comprise about half of the total.

In Miami, prices were flat from October to November. Prices dropped 0.4 percent from September to October, and the community is down 12.1 percent for the year.

Prices in this region have been showing stability in recent months, according to data released Monday by the Florida Association of Realtors.

December prices in Sarasota-Bradenton were up 5 percent from a year ago and up 4.6 percent from November. The median — the midpoint between the highest and lowest price — was $167,400 during December. In Charlotte County-North Port, the median rose 9 percent to $111,800 from $102,400 a year ago. The price was up 11.8 percent from $100,000 in November.

Rising prices are important to the economic recovery because they make homeowners feel wealthier and lead them to spend more money. Price increases also help restore home equity for the one-in-three homeowners who currently owe more on their mortgages than their homes are worth.

In a research note, Deutsche Bank analyst Joseph LaVorgna wrote that the price improvements in some cities should lead to a $1 trillion increase in homeowner equity by the current quarter.

Phoenix and San Francisco posted the highest month-to-month gains, on a seasonally adjusted basis, while New York and Chicago had the largest declines.

The tax credit for first-time homebuyers had been scheduled to end Nov. 30, but Congress extended the deadline through April, and expanded the program to include a tax credit for current homeowners.

Prices increased for the seventh straight month in San Francisco, where sales in the $500,000 to $750,000 range were strong. Buyers took advantage of the tax credits and low interest rates.

In Las Vegas, prices edged up 0.1 percent, the first month-to-month increase since January 2007. Still, prices are down 56 percent in Las Vegas since peaking in April 2006.

The list of cities with price increases, on a seasonally adjusted basis, also included Los Angeles, San Diego, Denver, Boston and Charlotte, N.C.

While prices have risen steadily on a national basis, some economists predict they will dip again early this year because of high unemployment and foreclosures.

“Until we get job growth, we won’t get complete healing of the housing market,” said Jeff Humphreys, an economist with the University of Georgia.

Source: Associated Press and Herald Tribune


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