Home Prices Rose for Seventh Straight Month in December
"As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now. However, the rate of improvement seen during the summer of 2009 has not been sustained," said David M. Blitzer, chairman of the Index Committee at Standard & Poor's, in a statement.
Year-over-year percentage price changes in major U.S. cities were as follows: New York, down 6.3%; Chicago, down 7.2%; Boston, up 0.5%; Washington, D.C., up 1.9%; Atlanta, down 4.0%: Miami, down 9.9%; Dallas, up 3.0%; Denver, up 1.2%; Los Angeles, unchanged; and San Francisco, up 4.8%.
Originally greeted by Wall Street with a shrug, the S&P/Case-Shiller home price index rose to market-mover status in 2008 as it became clear that the United States' decade-long housing boom had, in fact, been a bubble fueled considerably by mortgage-market excesses. The bursting of that bubble triggered record numbers of home mortgage foreclosures and defaults on mortgage-backed securities (the now-infamous "toxic assets"), which led to the financial crisis that the U.S. and world are still trying to recover from today.
A Firming Housing Market
Case-Shiller has provided another encouraging report, but even so, investors -- and certainly potential home buyers -- shouldn't become overly bullish: Home inventories remain high, and prices could start to fall again at any sign of weakness or a stall in the U.S. economy. If the trend of rebounding home prices is to continue, the U.S. will have to see job growth soon: Higher employment levels lead to an increase in household formation, which historically has been a major catalyst for home-price gains.