Home Prices Up In Detroit, 16 Other Cities
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Home prices rose in June for a third straight month as now-expired tax credits inspired a burst of home-buying. But prices are expected to fall through the rest of the year now that demand has faded.
The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday posted a 1 percent increase in June from May and was up 4.2 percent from a year ago.
Home prices nationally were up 4.8 percent in the second quarter compared with the first quarter. That was largely because buyers could take advantage of government tax credits of up to $8,000.
Home sales have dropped sharply since those incentives expired. Lending standards remain tight and unemployment is stuck near double digits.
Seventeen cities showed price gains on a monthly basis. The biggest monthly price increases were in Chicago, Detroit and Minneapolis. Prices rose 2.5 percent in each of those cities from a month earlier. Prices in Seattle and Phoenix were flat on a monthly basis. Home prices in Las Vegas fell 0.6 percent.
Nationally, prices have risen 6 percent from their April 2009 bottom. But they remain 28 percent below their July 2006 peak.
Prices are widely expected to fall in the second half of the year. Sales of previously occupied homes plunged in July to the lowest level in 15 years, despite the lowest mortgage rates in decades and bargain prices in many areas.
As sales have slowed, the inventory of unsold homes on the market has grown. At the current sales pace, it would take more than a year to exhaust the unsold inventory, compared with a healthy level of about six months. When unsold homes sit on the market, sellers are forced to lower their asking prices.
(Copyright 2010 by The Associated Press. All Rights Reserved.)