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Rising Home Prices Suggest Modest Recovery

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ALBUQUERQUE, N.M. — Home prices rose in May from April in every city tracked by a leading index, a sign that increasing sales and tight inventories are supporting a modest housing recovery.

The Standard & Poor’s/Case-Shiller home price index released Tuesday showed increases in all of the 20 cities tracked. And a measure of national prices rose 2.2 percent from April to May, the second increase after seven months of flat or declining readings.

The index follows no New Mexico cities, but Realtors Association of New Mexico data measuring a combination of new and existing homes said the June 2012 median price was $175,000 compared to $170,000 for May. Median prices declined slightly in half the reporting markets and rose slightly in the remaining counties.

In the Albuquerque metro area, median sales prices dropped slightly to $172,700 in June from $175,000 the month before, but were up from $166,500 in June 2011, according to the Greater Albuquerque Association of Realtors.

The Case-Shiller index showed that Chicago, Atlanta and San Francisco posted the biggest monthly increases. Detroit, San Diego and Charlotte posted the smallest gains.

Phoenix, one of the hardest-hit cities in the housing slump, posted the strongest year-over-year gain in home prices. Still, prices there remain more than 50 percent below their peak, reached in summer 2006.

The increases partly reflect the impact of seasonal buying. The month-to-month prices aren’t adjusted for seasonal factors.

In the past year, the 20-city price index has dropped 0.7 percent, the smallest decline since September 2010. That’s much lower than the 1.8 percent year-over-year decline in April.

Many economists were encouraged by the widespread nature of the increases.

“The fact that most regions … have seen gains in recent months is a positive sign that the gradual improvement in housing conditions is becoming broader based,” Peter Newland, an economist at Barclays Capital, said in a note to clients.

David Blitzer, chairman of the S&P’s index committee, cautioned that the trend would need to continue into the summer and fall to ensure that it isn’t just a reflection of strong springtime and early summer sales.

“The housing market seems to be stabilizing, but we are definitely in wait-and-see mode for the next few months,” he said.

Even with the gains, the index is 33 percent below its peak reached in the summer of 2006, at the height of the housing boom. Based on the 20-city index, home prices are now at about the same level as in early 2003.
— This article appeared on page B1 of the Albuquerque Journal

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