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U.S. Home Prices Inch Up, but Worries Remain

Source: NY Times

Posted on 30 Mar 2010

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Housing prices edged upward in January, according to data released Tuesday.

The Standard & Poor's Case-Shiller Index rose 0.3 percent in January from December, seasonally adjusted, its eighth consecutive monthly increase.

But the apparent good news in the widely watched measure masked underlying troubles. David M. Blitzer, chairman of the index committee at Standard & Poor’s, called the report “mixed.”

“While we continue to see improvements in the year-over-year data for all 20 cities, the rebound in housing prices seen last fall is fading,” Mr. Blitzer said.

The seasonal adjustment of the data lifts the numbers in the soft winter months. On an unadjusted basis, the index fell 0.4 percent in January from December, extending a pattern of decline.

House sales rose in the fall as buyers and sellers eagerly did deals before the government’s $8,000 tax credit was scheduled to end Nov. 30. Congress then extended the credit until April 30, but the momentum was lost. Sales volume immediately plunged.

Other housing indexes, which use different sets of data from different communities, show that the expected ending of the credit was also hard on prices.

The First American CoreLogic Home Price Index dropped 1.9 percent in January, double its decline in December. The Federal Housing Finance Agency’s index dropped 0.6 percent in January after falling a revised 2 percent in December.

Analysts said that Case-Shiller would eventually slide as well.

“It is only a matter of time before the index records a double-dip in prices,” Paul Dales of Capital Economics said.

The housing market bottomed last winter. On an annual basis, the Case-Shiller index is now down less than 1 percent. Prices are down about 30 percent from the peak in the summer of 2006.

Twelve of the cities in the index went up in January from December. Los Angeles was the biggest gainer, up 1.7 percent. Chicago was the biggest loser, dropping 0.8 percent.

With the January 2010 data now published, it is possible to track the best and worst cities to have owned real estate over the century’s first decade.

The three best cities are no surprise: Los Angeles, New York and Washington. All are more than 70 percent above their level in January 2000.

Anyone who bought in Las Vegas would have lost a few dollars after paying their agent’s commission. But the worst-performing city in the index was Detroit, which ended the decade 28 percent below where it began.