Seasonal gains help S&P/Case-Shiller rise in May from month earlier

The average price of a single-family home rose again in May after the first gain in eight months in April, according to the Standard & Poor’s/Case-Shiller index. The S&P/Case-Shiller 10-city composite index increased 1.1% in May from the prior month and the 20-city index rose 1%. Both indices remain lower than a year ago, with the 10-city down 3.6% and the 20-city composite 4.5% lower than May 2010. “We see some seasonal improvements with May’s data. This is a seasonal period of stronger demand for houses, so monthly price increases are to be expected and were seen in 16 of the 20 cities,” according to David Blitzer, chairman of the index committee. However, 19 of 20 cities saw prices drop over the last 12 months. The concern is that much of the monthly gains are only seasonal.” Prices fell in May in Detroit, Las Vegas and Tampa, Fla., and stayed flat in Phoenix. The nation’s capital was the only metropolitan statistical area to see gains in May from a year earlier with a 1.3% rise. Home prices in Minneapolis fell 11.7% from a year ago. Blitzer said May’s Case-Shiller report showed unusually large revisions in some MSAs. “In particular, Detroit, New York, Tampa and Washington all saw above normal revisions. Our sales pairs data indicate that these markets reported a lot more sales from prior months, which caused the revisions,” according to Blitzer. “The lag in reporting home sales in these markets has increased over the past few months. Also, when sales volumes are relatively low, as is the case right now, revisions are more noticeable.” He said sluggish single-family housing starts, declining mortgage default rates and tightened lending standards continue to permeate the housing market. “Combined, these data all support a continuation of the ‘bounce-along-the-bottom’ scenario we have witnessed in the housing market over the past two years,” Blitzer said. After peaking in the summer of 2006, the S&P/Case-Shiller home prices indices are down 32.1% for the 10-city and 32.3% for the broader composite through May. The indices are now at levels last seen in the summer of 2003. Write to Jason Philyaw.