RTTNews - While Standard and Poor's released a report on Tuesday showing that U.S. home prices continued to decline at a significant annual rate in the month of May, the pace of decline in prices slowed for the fourth consecutive month.
The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 17.1 percent in May compared to the 18.1 percent decrease reported for April. Economists had expected the report to show that prices fell 17.9 percent year-over-year.
Standard and Poor's noted that the index has now shown four consecutive months of improvement after sixteen consecutive months of record annual declines.
The improvement for the 20-City composite index came as 17 of the 20 metro areas saw improvement in their annual returns compared to the previous month.
David M. Blitzer, Chairman of the Index Committee at S&P said, There is a clear inflection point in the year-over-year data, due to four consecutive months of improved rates of return, after the steep decline that began in the fall of 2005.
On a monthly basis, S&P said that 13 of the 20 metro areas reported positive returns, contributing to the first monthly increase by the 20-city composite since the summer of 2006. The 20-city composite index rose 0.5 percent for the month.
Blitzer said, To put it in perspective, these are the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing.
Dallas and Denver reported their third consecutive month of positive returns, while Atlanta, Boston, Cleveland, San Francisco and Washington D.C. each reported their second consecutive month of positive returns.
While many indicators are showing signs of life, Blitzer added, We should remember that on a year-over-year basis home prices are still down about 17% on average across all metro areas, so we likely do have a way to go before we see sustained home price appreciation.
The U.S. Commerce Department released a report on Monday showing that new home sales in the month of June increased by much more than economists had been anticipating amid a pullback in new home prices.
The report showed that new home sales jumped 11 percent to an annual rate of 384,000 in June from the revised May rate of 346,000. With the increase, new home sales rose to their highest rate since 390,000 in November of 2008.
While sales were down 21.3 percent compared to the same month a year ago, they still came in well above the economists' expectations. Economists had expected sales to rise to 352,000 from the 342,000 originally reported for the previous month.
The stronger than expected sales growth came amid a pullback in prices, with the median sales price of new houses sold in June falling 5.8 percent to $206,200 from $219,000 in the previous month. The median sales price had increased for two consecutive months.
On an annual basis, the median sales price for June was down 12 percent from $234,3000 in the same month a year ago.
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