Home prices jump in many major cities
Economists still predicting uneven housing recovery
LOS ANGELES – U.S. home prices are rising sharply, new data indicate, helping to cement a growing consensus that the real estate slump is over.
But with jobs and the economy growing at a decidedly sluggish pace, experts caution that the housing market is not likely to sustain a sharp upward trajectory and give a major boost to the overall economy.
The Standard & Poor’s/Case-Shiller index for the nation’s 20 largest cities posted its first year-over-year increase, at 0.5 percent, since 2010, June data released Tuesday showed.
The annual improvement in the 20-city index was particularly significant given that the last time the measure posted such a gain, sales were being juiced by popular government tax credits. When that aid expired, prices collapsed and produced a troublesome “double-dip.”
Economists warn, however, that home prices could flatten or even decline during certain months, producing a jagged recovery. A rash of other economic indicators have been disappointing lately, including a key gauge of consumer sentiment in August released Tuesday, which fell to its lowest level since late last year.
“The crash is clearly over; housing is now improving, but the numbers overstate the case,” said Mark Zandi, chief economist for Moody’s Analytics.
“The improvement in housing is not consistent with the weakening consumer confidence numbers – consumers are still very nervous, and my sense is that they are still worried, and rightly so, about the job market.”
Economists on Tuesday said the nation’s housing market is on firmer footing than it was two years ago, driven by rock-bottom interest rates, a decline in foreclosed homes and a sense by consumers and investors that prices aren’t getting much cheaper.
“We are aware that we are in the middle of a seasonal buying period, but the combined positive news coming from both monthly and annual rates of change in home prices bode well for the housing market,” said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices.