Housing • Decline in costs could spur pattern of buying.
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U.S. home prices rose in June from the same month last year, the first year-over-year increase since the summer of 2010. The increase is the latest evidence of a nascent recovery in the housing market.
The Standard & Poor's/Case-Shiller home price index released Tuesday showed a gain of 0.5 percent from June 2011.
The last time the year-over-year index increased was in September 2010. For much of that 12-month period, the government was offering a home-buying tax credit.
The report also showed that all of the nation's 20-largest cities tracked by the index rose in June from May, the second consecutive time in which every city posted month-over-month gains. And all but two cities posted stronger gains in June than May.
Detroit, Minneapolis, Chicago and Atlanta recorded the biggest one-month gains. Salt Lake City is not included in the index, but the Salt Lake Board of Realtors recently reported that the median price for a single-family home was $214,900 in the second quarter, up nearly 6 percent from the same period in 2011.
"The combined positive news coming from both monthly and annual rates of change in home prices bode well for the housing market," said David Blitzer, chairman of the S&P's index committee.
Jonathan Basile, an economist with Credit Suisse, said improving home prices should boost home sales further in the coming months.
They "should start convincing prospective home sellers that it's not just a buyers' market," Basile said. "And when Americans become more comfortable with selling their home, they also become more comfortable with buying another one."
The S&P/Case-Shiller monthly index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The June figures are the latest available.
The housing market is making a modest but steady recovery in part because homes are more affordable: Mortgage rates have fallen to near-record lows. Housing prices are about one-third lower than at the peak of the housing bubble in 2006. Those trends have helped lift sales of both new and previously occupied homes.
Sales of previously occupied homes increased in July from June, the National Association of Realtors said last week. Sales have jumped 10 percent in the past year.
Builders are growing more confident after seeing more traffic from potential buyers. Last month they applied for the largest number of building permits in nearly four years last month.
The housing market has a long way to go to reach a full recovery. Some economists forecast that sales of previously occupied homes will rise 8 percent this year to about 4.6 million. That's still well below the 5.5 million annual sales pace that is considered healthy.
The Salt Lake Tribune contributed to this story