And so it continues; US house prices growing almost countrywide month on month in April is being hailed as further evidence that the housing market is on the turn, despite the weak jobs market and other pressures that continually refuse to join in the growth and festivities. According to the renowned Case-Shiller index house prices rose in 19 out of the cities in tracks. This not only means that price rose in the majority of major US cities, but it is also the second consecutive month that this has been the case.
According to the index price across the country grew 1.3% between April and May, although as always there were vast differences from region to region. The biggest increases were in San Francisco, Washington and Phoenix, while prices in Detroit fell 3.6 percent – Detroit was the only city to record a drop. The San Francisco metro area (including San Francisco, San Mateo, Alameda, Contra Costa and Marin counties) recorded a growth of 3.4% over the month, larger than any of the other 20 metro areas monitored by the index.
However, even after this considerable growth in prices, there is still substantial doubt over whether the apparent recovery can be trusted or is just a flash in the pan. This doubt isn't helped by volatility in the data, especially the data surrounding home sales, which has been taking 2 steps forwards for everyone back in the past few months. But even the price growth can be questioned.
Looking at the Case-Shiller index on an annual basis we have growth in only half the 20 cities, outweighed by the declines in the rest, as the overall figure is a 1.9% drop across the 12 months ending April. Meanwhile a separate report from CoreLogic says that prices across the country grew by 1.1% during the same period. Foreclosures are another cause of doubt, the month before last we had a report of falling foreclosure activity, followed by another report saying it had come back up last month.
The continued weight foreclosures are having on the market can be seen in places like Atlanta, which is one of the worst hit cities to the tune of a 17% drop in prices in the 12 months ending April. A big difference compared to the state in which it resides; prices in Phoenix grew 8.6% during the same period.
However, looking at the data since the start of the year, the overall pattern does seem to be one of steady recovery, with sales figures generally improving, supply figures gradually coming down, and of course fledgling price growth. From an investment perspective now is most likely the time for anyone still waiting to start making their moves, those who wait till the bottom is confirmed will have waited too long.
- Thursday 28 June 2012