Prices of single-family homes fell in February on a monthly basis but posted the first annual increase in more than three years, Standard & Poor's/Case Shiller home price indexes showed on Tuesday.
The report suggests more price erosion is possible before prices start rising on a sustained basis, S&P said. The price improvement can be attributed to momentum from the federal homebuyer tax credits, which expire on April 30, and prices could be pressured further by foreclosure sales.
The S&P composite index of 20 metropolitan areas declined 0.1 percent in February on a seasonally adjusted basis, matching the forecast in a Reuters survey, after rising for eight straight months.
On an unadjusted basis, prices dropped 0.9 percent in February, worse than the estimated 0.3 percent decline and following a 0.4 percent downturn in January.
The home price indexes, for both 10-cities and 20-cities, showed the first annual upturn since December 2006, rising 1.4 percent and 0.6 percent respectively. The annual rise in the 20-city index, however, was half of the 1.2 percent increase forecast in a Reuters poll.
These data point to a risk that home prices could decline further before experiencing any sustained gains, David M. Blitzer, Chairman of the Index Committee at S&P, said in a statement.
While the year-over-year data continued to improve for 18 of the 20 Metropolitan Statistical Areas and the two Composites, this simply confirms that the pace of decline is less severe than a year ago, he said. It is too early to say that the housing market is recovering.
(Reporting by Lynn Adler, Editing by Chizu Nomiyama)