U.S. Home Prices Rise for Sixth Straight Month

The U.S. housing sector's long, slow journey to health continues, as U.S. home prices in 20 cities rose for the sixth straight month, inching up 0.2% on a seasonally adjusted basis, according to the S&P/Case-Shiller U.S. National Home Price survey.The index rose 0.3% in October, on a seasonally adjusted basis. (On a non-seasonally adjusted basis, home prices in the 20 cities fell 0.2% in November, but this figure does not include statisticians' adjustments for changes in seasonal activity.)

On a year-over-year basis, however, home prices in the 20-city index fell 5.3% in November, or slightly worse than the Bloomberg News consensus estimate of 5.0%. Although that's still the lowest year-over-year price drop in two years.

Mixed Price Picture

"While we continue to see broad improvement in home prices as measured by the annual rate, the latest data show a far more mixed picture when you look at other details." David M. Blitzer, Chairman of the Index Committee at Standard & Poor's, said in a statement.

For example, only five U.S. metropolitan areas recorded price gains in November: Phoenix, up 1.1%; Los Angeles, 0.8%; San Francisco, 0.6%: San Diego, 0.4%; and Portland, Ore., 0.3%.

Equally significant, in November, 13 cities registered price declines, including New York, down 1% and Chicago, which fell 1.1%.

The largest year-over-year percentage declines were in: Las Vegas, down 24.5%; Phoenix, down 14.2%; Tampa, down 13.2%; Detroit, down 13.0%; and Seattle, down 10.6%; Year-over-year percentage price changes in other major U.S. cities were as follows: New York, down 7.1%, Chicago, down 8.5%, Boston, down 0.7%, Washington, D.C., down 0.6%, Atlanta, down 6.2%, Dallas, up 1.4%, Denver, up 0.5%, and Los Angeles, down 3.5%.

Originally greeted by Wall Street with a shrug, S&P/Case-Shiller home price data rose to market-mover status in 2008 as it became clear that the United States' housing boom during the past decade was, in fact, a bubble fueled considerably by mortgage market excesses. The bursting of that bubble triggered record home mortgage foreclosures and mortgage-backed securities defaults (toxic assets), which led to the financial crisis that the U.S. and world are still trying to end today.

Housing Analysis

A mixed-bag month regarding the U.S. housing sector in November, according to Case-Shiller. Home prices in the 20-city index did rise for a sixth consecutive month, on a seasonally adjusted basis -- a positive -- but there were also signs of softening in numerous markets. That's a clear sign that, while inventories are declining and home sales have risen, the housing sector is hardly healthy and several hurdles remain, including: adjustable-mortgage resets, which may increase foreclosures.

Further, an any signs of GDP weakness, or a stall by the U.S. economy, could send prices tumbling again. What's needed now? Job growth to increase household formation -- which historically has been a major catalyst for home price gains.
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