With this spring's tax credit still working its way through the housing market, the price of U.S. homes rose 1% in June for the third consecutive month, according to the Standard & Poor's Case-Shiller index released Tuesday, August 31.
The U.S. National Home Price Index rose 4.4% in the second quarter of 2010, after having fallen 2.8% in the first quarter. The index was up 1% from May to June, and home prices are 3.6% above their year-earlier levels. Prices are up 6% from their April 2009 low, but 28% below their July 2006 peak.
Despite the positive news, the outlook for the U.S. housing market is not so promising.
"Housing prices have rebounded from crisis lows, but other recent housing indicators point to more ominous signals as tax incentives have ended and foreclosures continue," according to a statement in the S&P/Case-Shiller release.
The data showed continued gains for home prices in June but at a slower pace compared to May. The unadjusted composite 10-city index rose 1.0% in June versus a 1.3% gain in May, revised 1.2%. But there's plenty of seasonality in home prices with warm weather having a positive impact. Adjusted data, which exclude the positive seasonal effect of warm summer weather, shows only a 0.3% rise, slower than the 0.5% increases in May and April.
"The outlook for home prices is troubling, given big drops for new home prices in June and July and the general backdrop of ballooning supply and distressed sales," according to a Nasdaq news report.
The year-on-year rate in June slowed to 5.0% for both the unadjusted and adjusted index versus a 5.4% unadjusted rise in May and a rise of 5.5% when adjusted.
"While the numbers are upbeat, other more recent data on home sales and mortgages point to fewer gains ahead," said David M. Blitzer, chairman of the index committee at Standard & Poor's, in a statement. "Even with concerns about near-term developments, we recognize that the housing market is in better shape than this time last year. Among the other hard-hit cities, the news is also a bit encouraging. Las Vegas, however, remains among the weaker cities."
California's cities have moved from some of the hardest hit to three of the four leading cities based on year-over-year gains, Blitzer added. Seventeen cities posted price gains in the month. Seattle and Portland, Oregon, were flat from a month ago. Minneapolis, San Diego, San Francisco, and Washington D.C. have shown recovery from recent lows
Read about May's S&P/Case-Shiller index from the archives of InvestmentAdvisor.com.