Home prices rise in June in most cities in 20-city index
WASHINGTON — 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.
IN THE SPRINGS
Colorado Springs is not part of the Standard & Poor's/Case-Shiller index. But home prices in the area have been rising for several months. The median price of new and existing homes sold in July in the Colorado Springs area climbed 5.1 percent to $209,900 when compared with the same month last year, according to a report by the Pikes Peak Association of Realtors. And a National Association of Realtors report showed that Springs’ prices increased to $196,800 in the second quarter, up 4.1 percent from the same period last year.
