Home prices rose modestly in October, mostly because of a flood of buyers seeking to take advantage of the government’s offer of a tax credit, data released Tuesday showed.
Underneath this apparent good news, however, were some disquieting signs of deterioration.
The Standard & Poor’s/Case-Shiller home price index, a widely watched measure of the housing markets in 20 metropolitan areas, rose 0.4 percent from September on a seasonally adjusted basis. It was the fifth consecutive month that prices were up.
But seasonal adjustments tend to hide any weakness in the cooler months, when fewer houses are sold. On an unadjusted basis, the index was flat in October.
“We’ve started to see the possibility of either a leveling off of prices for a few months or perhaps a double-dip,” said Maureen Maitland, the vice president for index services at S.& P.
Analysts have predicted for months that prices will resume their slump this winter, although most expect the drop to be moderate.
Housing remains under severe stress, and the government’s extensive and expensive support of the market is reaching its limit. While the tax credit has been renewed until next spring, its effects will probably diminish. And the Federal Reserve says it will gradually end its program to push down interest rates in the first quarter, in effect making houses more expensive.
Meanwhile, foreclosures are continuing to affect the market, and credit remains tight.
Dan Greenhaus, chief economic strategist for Miller Tabak and Company, wrote in a research note that “it is more than likely that prices have a bit further to fall which should help continue supply/demand rebalancing and help fix the ongoing issues in the housing market.”
The Case-Shiller index is down 7.3 percent from October a year ago and is off 29.5 percent from its peak.
Prices fell or were flat in nine of the 20 cities surveyed in October, the same as in September. But the recovery is beginning to diverge sharply by metro area, Wells Fargo’s chief economist, John Silvia, noted.
In the last three months, prices in San Francisco increased at an annual rate of 25 percent while Minneapolis was up 17 percent and Los Angeles rose 11 percent. Phoenix, long a laggard, rose 13 percent.
But New York, Portland and Boston were up less than 2 percent.
Las Vegas, the epicenter of the housing crash, shows no signs of recovery. Prices have fallen there for 38 months, and are now barely above the level at which they began the decade.
From the New York Times
The Valerie Fitzgerald Group specializes in luxury residential real estate in Beverly Hills, Bel Air, Brentwood, Santa Monica and Malibu. Valerie has more than 20 years of real estate experience and is known for her solid reputation in the West Los Angeles brokerage community. She’s also the author of Heart and Sold: How to Survive and Build a Recession-Proof Business.
