U.S. home prices fell in the month of February, but rose compared to a year ago for the first time in more than three years, in the latest sign that the housing market is slowly recovering.
House prices have benefited recently from a federal homebuyer tax credit that expires on April 30, but a glut of mortgage foreclosure sales continue to weigh on the market, Standard & Poor's said on Tuesday.
The S&P/Case-Shiller 20-city composite price index fell 0.9 percent on an unadjusted basis in February, worse than a 0.3 percent decline estimated in a Reuters survey. Seasonally adjusted, prices declined by 0.1 percent, as expected, after a string of eight straight monthly increases.
S&P's 10-city and 20-city index increased year-on-year for the first time since December 2006, rising 1.4 percent and 0.6 percent, respectively, compared to February 2009.
But the 20-city index gain was half of the rise forecast in a Reuters poll.
We are really still in what we consider a stabilization period, said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.
From the peak in mid-2006 through February 2007, U.S. home prices are still down more than 30 percent on average nationwide, S&P noted.
While prices slid in February, mortgage rates stayed low near 5.0 percent and the number of home sales leaped in March as buyers rushed to take advantage of the soon expiring tax credit of up to $8,000. Sales and prices through the spring months will be closely monitored to see if the momentum continues once the tax incentive ends.
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, said David M. Blitzer, Chairman of S&P's Index Committee, in a statement. It is too early to say that the housing market is recovering.
(Reporting by Lynn Adler)