Home Prices Hold Steady in July Despite Economic Headwinds

The rocky economic landscape could give way to a smoother housing sector if recent home prices signal anything, with a major ""Standard & Poor's"":http://www.standardandpoors.com/home/en/us/Case-Shiller index revealing Tuesday a marginal uptick in numbers over July. Economists chalked up the gains to a seasonal boost and suggested more stability may be on the way for a troubled housing economy.

[IMAGE]

The ""S&P/Case-Shiller Home Price Indices"":http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245321043141&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true, representing a monthly data-gathering effort by S&P, track prices for single-family homes across the industry and housing economy.

Although prices have fallen by 4.1 percent since July 2010, the indices reflected a 0.9-percent boon for measures of activity across 10 and 20 major metropolitan cities, the fourth such month in which numbers for houses went up.

Prices leapt upward for 17 of the 20 listed cities, with Detroit and Washington, D.C., showing up Las Vegas and Phoenix with 1.2-percent and 0.3-percent increases, respectively. Of all the cities, the indices found prices crawling in Minneapolis, which stayed near rock bottom with a 9.1-percent crawl in figures for single-family homes.

""While we have now seen four consecutive months of generally increasing prices, we do know that we are still far from a sustained recovery,"" David Blitzer, chairman of S&P's indices, offered in a statement. ""Continued increases in home prices through the end of the year and better annual results must materialize before we can confirm a housing market recovery.""

He noted a 4.1-percent dip among 20 cities since July last year, alongside a 3.7-percent decline among 10 cities listed by the indices.

The new price numbers offer a welcome reprieve for the still-sagging housing economy. A ""weak jobs report"":https://themreport.com/articles/housing-industries-freeze-alongside-zero-job-growth-2011-09-02 in August showed the economy adding as many jobs as it slashed. ""New-home sales"":https://themreport.com/articles/economic-worries-trample-on-new-home-sales-over-august-2011-09-26 from the Census Bureau sauntered back by 2.3 percent month-over-month over the same period.

Still-weaker economic ""outlooks"":https://themreport.com/articles/fannie-us-recovery-flirting-with-new-downturn-2011-09-19 and ""forecasts"":https://themreport.com/articles/imf-slashes-gdp-forecasts-calls-for-housing-relief-2011-09-20, more recently published by ""Fannie Mae"":http://www.fanniemae.com/portal/index.html and the ""International Monetary Fund"":http://www.imf.org/external/index.htm, sketch a rough picture of national and global GDP amid strengthening debt crises in Europe and trends that find U.S. consumers warier.

""We still expect prices to fall back a bit later this year,"" ""Paul Dales"":http://www.capitaleconomics.com/staff/global-economics/paul-dales.html, a senior U.S. economist with ""Capital Economics"":http://www.capitaleconomics.com/, said in a note. ""And even when they do eventually stabilize [sic], a structural deficit in demand will prevent them from rising on a consistent basis until 2014.""

He cited an alternative house price index released by the ""Federal Housing Finance Agency"":http://www.fhfa.gov/, which found single-family home prices chugging along at 0.8 percent month-over-month in July, a healthier 2.2 percent above the pickup in March.

""In any case, even when prices finally stop falling, a rapid rebound is unlikely when banks are still reluctant to boost their lending and when widespread negative equity means households are unable to borrow,"" Dales said.