DETROIT (WWJ/AP) – Home prices rose for a fourth straight month in most major U.S. cities in July, buoyed by the peak buying season. But the housing market remains depressed, and prices are expected to decline in the coming months.
Over the past 12 months, prices have fallen in all but two cities: Detroit and Washington.
In Detroit, prices have risen 1.2 percent during that stretch. Still, the city has been among the nation’s worst housing markets over the past decade. In July, homes prices there were equal to 1995 levels. Washington, conversely, has had the nation’s best housing market.
“With July’s data we are seeing not only anticipated monthly increases, but some fairly broad improvement in the annual rates of change in home prices,” said David Blitzer, Chairman of the Index Committee at S&P Indices, in a news release.
“As with May and June’s reports, we saw some unusually large revisions across some of the MSAs. In particular, Detroit was most affected in July, with the revisions showing a much healthier market than previously thought. Our sales pairs data indicate that this market reported a lot more sales in May and June, which caused the revisions,” said Blitzer.
“As we have indicated before, when sales volumes are relatively low and the ratios of distressed-to-non-distressed sales are changing rapidly, revisions are more noticeable. These factors likely contributed to the revisions we saw not just in Detroit, but in many of the MSAs over the past few reports,” he said.
Prices rose sharply in Minneapolis and Chicago. Prices in two cities hit hardest by the housing crisis – Las Vegas and Phoenix – declined.
“This is still a seasonal period of stronger demand for houses, so monthly price increases are expected,” said Blitzer. “While we have now seen four consecutive months of generally increasing prices, we do know that we are still far from a sustained recovery.”
Housing is a key reason the economy has struggled more than two years after the recession officially ended.
High unemployment, larger required down payments and tighter credit are preventing many buyers from entering the market. Many who could afford to buy are waiting because they are worried the U.S. could fall back into another recession and prices could fall further.
Sales of previously occupied homes are only slightly ahead of last year, which was the weakest since 1997.
New-home sales dropped in August for a fourth straight month. This year is shaping up to be the worst for sales of new homes on records dating back to 1963.
The Associated Press contributed to this report.