House prices ticked up in April, finally ending the descent that extended over the past eight months. The release of the Standard & Poor’s Case-Shiller house price indexes (HPI) revealed a 0.7% (NSA) increase in the Composite 20 index (CS20) and 0.8% gain in the Composite 10 (CS10) index in April. While April’s increase is a welcome sign, the extended decline has left both indexes well below their year-ago levels, with the CS20 down 4.0% and the CS10 off 3.1% from the April 2010 readings.
Prices improved in 13 of the 20 cities covered by the index on a not seasonally adjusted basis. The greatest improvements were observed in Washington DC (+3.0%), San Francisco (+1.7%), Atlanta (+1.6%), Seattle (+1.6%) and Denver (+1.5%). Prices continued to fall in cities that are still experiencing the weakest economic conditions and/or have been most affected by the housing market downturn, including Detroit (-2.9%), Las Vegas (-0.7%), Tampa (-0.4%), Chicago (-0.4%) and Miami (-0.2%). The indexes for these cities reached new lows in April and further declines are possible.
The improvement in the Case-Shiller Indexes was consistent with the trend observed in the Federal Housing Finance Agency HPI, which also rose 0.8% in April after declining for ten consecutive months. The April house price numbers are also consistent with the NAHB’s view that despite the rise and fall associated with the various phases of the home buyer tax credit, the overall trends in the composite HPIs have been flat since reaching the trough in early 2009. This trend is expected to continue over the remainder of 2011, but prices will likely remain volatile on a month-to-month basis. By 2012, we anticipate house prices will show modest growth, which will support a more definitive recovery in the housing market.