Foreclosed for Sale Slowed, Home Prices Rose in 20 Cities

Prices for single-family houses in 20 major cities in the U.S. increased by 1.4 percent in June, marking the second consecutive monthly increase after dropping every month since the middle of 2006.

According to the Standard & Poor’s/Case-Shiller 20-City Home Price Index for June, home prices increased in 18 of the 20 major cities compared to May. The biggest increases were in Cleveland, Minneapolis and San Diego. Only Las Vegas and Detroit showed price declines in June. Last year, home prices declined in all 20 major cities.

Meanwhile, foreclosed for sale slowed down in certain areas as various foreclosure prevention programs delayed foreclosure actions and as foreclosure inventories were reduced significantly by first time home buyers and investors in prior months.

In June, according to a nationwide foreclosure sales study, the percentage of foreclosure and distressed sales dropped to 31 percent, a significant decline from the 45 to 50 percent share in the first months of 2009.

Compared to June last year, home prices declined by 15.4 percent, marking an improvement from the 19-percent year-over-year decline in January. Compared to the peak home price in the middle of 2006, home prices dropped by 31 percent.

Meanwhile, a separate report from the Federal Housing Finance Agency showed that its home price index increased by a seasonally adjusted 0.5 percent in June and its quarterly home price index dropped by 0.7 percent.

The FHFA quarterly price index showed that home prices dropped by 6.1 percent compared to June last year. FHFA sets its index by comparing repeat transactions for home loans financed through Freddie Mac or Fannie Mae.

According to the FHFA index, home prices dropped in all states except in 4 states. The biggest price drops occurred in Florida, Nevada, California, Arizona, Utah, Oregon and Hawaii.

The S&P/Case-Shiller home price index monitors the prices of repeat home sales in 20 major cities over time.

Robert Shiller, co-developer of the Case-Shiller home price index, said the home price upward trend is a positive sign, but he said expected foreclosures in the coming months could push down home prices again.

In contrast, RBS Securities chief economist Stephen Stanley said that home prices have reached bottom, based on various indicators. But he added that prices would not increase much over the next couple of years because many home buyers are property investors who buy only if there is great potential for profits.

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