By Les Christie
In a sign that the U.S. housing market is recovering, home prices rose for the second straight month in May, according to an industry report issued Tuesday.
Home prices climbed 2.2 percent compared with a month earlier, according to the S&P/Case-Shiller 20-city home price index. Prices are still off 0.7 percent compared with May 2011, but that's the lowest year-over-year decline in 18 months, according to David Blitzer, a spokesman for S&P.
The report gave support for industry experts who have been saying that the long-awaited housing market recovery is underway. But Blitzer sounded a note of caution.
"We need to remember that spring and early summer are seasonally strong buying months so this trend must continue throughout the summer and into the fall," he said.
Adjusted for seasonal effect, the price gain shrank to 0.9 percent, but that's still a strong increase.
The roller coaster ride for home prices took them up 106.5 percent between January 2000 and their high of July 2006. After they peaked, prices lost more than 34 percent of their value. The gains of the last two months have pared that loss to 33 percent.
All 20 cities in the index posted positive returns, led by Chicago, where prices rose a whopping 4.5 percent month-over-month. In Atlanta, prices had dropped 17 percent over the 12 months ended in April, but it turned that around in May with an increase of 4 percent.
Other big winners were San Francisco, up 3.9 percent, and Minneapolis, where prices rose 3 percent. The smallest gain was recorded by Detroit, where prices inched up 0.4 percent. Phoenix posted the best annual return by far, up 11.5 percent.
"Investor money has come in to some of the hard-hit markets like Phoenix and Florida cities," said Mike Larson, a real estate analyst with Weiss Research.
The strength of the gains was unexpected. A panel of experts put together by Briefing.com had projected a year-over-year decline of 1.8 percent but the big jump in May prices led to the more modest 0.7 percent dip.
Larson pointed out that Case-Shiller is a lagging housing market indicator. It is a three-month rolling average through the end of May, so some of the data is almost five months old. Back then, the overall economy seemed to be on the upswing and unemployment was dropping.
Those improvements have flattened out. The unemployment rate actually ticked up in May to 8.2 percent and stayed at that level in June.
"Momentum will fade as we enter the summer months," said Larson. "The broad economy can't seem to generate much growth."
Homes are selling faster in the majority of U.S. markets than they were a year ago, according to data recently released by Realtor.com. Ten areas in particular are sweet spots if you're selling a home.
The metropolitan areas on this list of the cities where homes sell the fastest tend to be in states that have been hardest hit by the economic downturn. Five of the metropolitan areas are in California.
Click through the gallery to find out where homesellers have the best shot at getting their house sold -- and fast.
Average number of days homes spend on market: 48 Median home price: $185,000 (73rd highest) Population: 4,192,887 (20th highest) Unemployment: 7.72% (65th highest)
The entire metropolitan area of Phoenix-Mesa, which has a population of more than 4 million, had 13,912 homes listed on the market in June -- the 20th highest of all the metropolitan areas surveyed. This is a drop of almost 40 percent since the same time last year. Speedy home-selling may be boosting the housing market in the Phoenix area.
Average number of days on market: 47 Median home price: $99,000 (the lowest) Population: 4,296,250 (18th highest) Unemployment: 11.21% (ninth highest)
Unlike many of the metropolitan areas on the list with high home values, in Detroit, there are many bargains to go around for homebuyers. Of the 146 regions surveyed by Realtor.com, only Detroit had a median home value below $100,000 last month. Housing prices in the area did not manage to crack through the six-figure ceiling despite increasing 10 percent from last year, a much higher rate than the national average of 2.68 percent increase. This has sparked much interest among buyers.
Average number of days on market: 45 Median home price: $549,000 (third highest) Population: 1,836,911 (39th highest) Unemployment: 8.89% (34th highest)
California was hit hard during the housing downturn, and San Jose has been no exception. From the first quarter of 2007 to the fourth quarter of 2011, home prices plunged 32.9 percent. Nevertheless, the median price of one of the 3,621 houses listed is still an impressive $549,000, the second highest of all home prices on the list and the third highest of all metropolitan areas surveyed. Buyers should not dawdle either.
Average number of days on market: 45 Median home price: $725,000 (the highest) Population: 4,335,391 (17th highest) Unemployment: 7.52% (68th lowest)
While Detroit’s median home listing price is less than $100,000, the median home price of $725,000 in the San Francisco area is the highest measured in the Realtor.com report. Yet, despite the high prices of homes, there isn't too much idle time on the market, as the average home is sold in 45 days.
Average number of days on market: 45 Median home price: $350,000 (17th highest) Population: 3,439,809 (21st highest) Unemployment: 7.40% (56th lowest)
The Seattle metropolitan area has a population of more than 3.4 million people, yet only 6,486 homes available for sale. With such conditions, it is not surprising that homes will get snatched up pretty quickly. Houses on average sit just 45 days on the market, which is down nearly 34% since last year.
Average number of days on market: 44 Median home price: $149,500 (23rd lowest) Population: 839,631 (60th lowest) Unemployment: 14.14% (fourth highest)
Bakersfield joins many other California cities in selling homes fast, but houses in the area are not likely to have San Francisco-like prices. The median home price of $149,500 is the lowest on this list, except for Detroit, and only a little more than a fifth of the median price of a San Francisco house.
Average number of days on market: 43 Median home price: $174,900 (58th lowest) Population: 930,450 (62nd highest) Unemployment: 15.54% (second highest)
Fresno has many similarities to Bakersfield. The median home price of $174,900 recorded in June is far lower than other California cities such as San Francisco and San Jose, but it is up 10 percent from a year earlier. Similar to Bakersfield, the 2,237 houses on the market are nearly half (49.1 percent) the number that were available last year.
Average number of days on market: 43 Median home price: $289,500 (23rd highest) Population: 380,821 (20th lowest) Unemployment: 6.13% (22nd lowest)
Prospective homebuyers in Anchorage really do not have the option of being choosy. There are only 1,120 houses on the market, a decline of about 29 percent from the previous year. This is the fourth-smallest number of home listings in all metropolitan areas surveyed.
Average number of days on market: 33 Median home price: $269,000 (27th highest) Population: 2,543,482 (27th highest) Unemployment: 7.51% (67th lowest)
The 33 days to sell a house in the Denver area is actually up by 10 percent, one of the very few metro areas to see an increase in the time it takes to sell a home. Denver was not as hard hit by the housing bust as many other metropolitan areas. Home prices from their peak in the first quarter of 2006 to the fourth quarter of 2011 dropped just 11.1 percent, well below the national average of 34.2 percent.