Posted on 27 Jul 2010
Home prices in 20 U.S. cities rose more than forecast in May from a year earlier as a government tax credit temporarily underpinned sales.
The S&P/Case-Shiller index of property values increased 4.6 percent from May 2009, the biggest year-over-year gain since August 2006, the group said today in New York. Another report showed consumer confidence dropped this month to the lowest level since February.
A retreat in demand since the April 30 contract-signing deadline to be eligible for an incentive worth up to $8,000 raises the risk home prices will slacken in coming months. The lowest mortgage rates on record are making houses more affordable, which may help overcome some of the effect of the mounting foreclosures that are pressuring property values.
“We just are going to muddle through for a while,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, who forecast the index would rise 4.5 percent, the closest of those surveyed. “I’m not looking for big movement from here either up or down.”