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S&P/Case-Shiller Home Price Indexes Improved in May, but Housing Market Remained Weak

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Home prices in May improved over prices in April, according to a Tuesday, July 27, report released by Standard & Poor’s which shows that the housing market has found its bottom and is stabilizing at a lower level.

The annual growth rates in 15 out of 20 metropolitan areas around the United States improved in May, with the S&P/Case-Shiller home price index up 5.4% in its 10-city composite and up 4.6% in its 20-city composite.

However, the index increases are somewhat misleading, according to S&P’s index chief.

“While May’s report on its own looks somewhat positive, a broader look at home price levels over the past year still do not indicate that the housing market is in any form of sustained recovery,” said David Blitzer, chairman of the S&P index committee, in the home price index news release for May.

“Since reaching its recent trough in April 2009, the housing market has really only stabilized at this lower level,” Blitzer continued. “The two composites have improved between 5% and 6% since then, but this is no better than the improvement they had registered as of October 2009. The last seven months have basically been flat.”

The May 2010 data for 15 of the 20 metropolitan areas and the two composite indexes showed an improvement in annual returns compared to April’s report. However, Blitzer noted, seasonal adjustments along with this spring’s federal homebuyer’s tax credit painted an inaccurate picture of how the housing market was truly performing.

“We need to watch where the housing markets will go after these temporary stimuli go away,” he said. “June’s existing and new home sales and housing starts data do not show much real improvement in those statistics either. It still looks possible that the housing market might bounce along the bottom for the foreseeable future, before showing any real improvement that will filter through to the rest of the economy.”

In individual cities, Boston, Charlotte, Cleveland, Dallas, and Denver while still positive, nevertheless reported weaker annual growth rates compared to April. Las Vegas posted a new index low as measured by the current housing cycle, where it peaked in August 2006.

Read a story about the home price index in April from the archives of


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