Home prices rose for the seventh straight month in December, a sign of price
stability as the U.S. housing market continues its bumpy road to recovery.
The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday
rose 0.3 percent from November to December, to a seasonally adjusted reading
of 145.87. The index was off 3.1 percent from December last year, nearly
matching analysts’ estimates that it would fall by 3.2 percent.
Only five of 20 cities in the index showed declines from November to
December. The index is now up more than 3 percent from its bottom in May,
but still 30 percent below its May 2006 peak.
Los Angeles and Phoenix posted the largest price increases. The worst
performer was Chicago with a 0.6 percent decline.
Rising prices are a key to the nation’s economic recovery because they make
homeowners feel wealthier and more comfortable to spend money. Consumer
spending accounts for more than two-thirds of all economic activity.
Price increases also help rebuild equity for homeowners who currently owe
more on their mortgages than their properties are worth. Roughly one in
three homeowners with a mortgage are now in that position, According to Moody’s Economic .com
The housing market is seeking stability as it bounces back from a four-year
recession. Sales of previously occupied homes fell almost 17 percent in
December, the largest monthly drop in 40-years of record-keeping, the
National Association of Realtors said. Data for January will be released
Friday, with analysts forecasting a 1 percent rise.
Sales of newly built homes are expected to rise 5.3 percent in January,
after declining sharply a month earlier. The Commerce Department will
release new data on Wednesday.
On a quarterly basis, U.S. home prices fell 2.5 percent compared with the
fourth quarter of 2008.
The Case-Shiller indexes measure home price increases and decreases relative
to prices in January 2000. The base reading is 100; so a reading of 150
would mean that home prices increased 50 percent since the beginning of the
index.
Posted by: Jeffery McClintock
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