Housing Market on its Way to Recovery?

Despite a 15.4 decline in national home prices during the second quarter from the same period a year ago, there are signs of a silver lining in the sky. The rate of single-family home price declines slowed from May to June, according the Standard & Poor's/Case-Shiller U.S. National Home Price Index released this week.

But home prices did continue to decline at records lows. The survey's 20-city home price index fell by 15.9 percent in June compared with a year ago, the largest drop since its inception in 2000. Fourteen cities in the monthly index, however, did show significant improvement from May to June.

Best and worst markets
The markets that were the high-flyers during the recent real estate boom continue to be the ones that are leading the current decline. Las Vegas led the largest annual declines, falling 28.6 percent followed by Miami at 28.3 percent and Phoenix at 27.9 percent.

On the plus side, Denver and Boston were the best performing markets for the month, returning 1.5 percent and 1.2 percent, respectively. Both these markets have had three consecutive months of positive returns. They are outdone by Charlotte and Dallas, however, which have recorded four consecutive months of positive returns.

Slow recovery
In a separate report from the Commerce Department, the sales of new single-family homes rose by 2.4 percent last month to a seasonally adjusted annual rate of 515,000 units, the most since April. The average price of a new-home sold in July was $294,600, down 4.1 percent from a year ago. The median home price - where half sell for more and half for less - was $230,700, down 6.3 percent from last year.

While it's still too early to say that the housing market has totally bottomed out, these two reports indicate that the severity of the housing slump may be lessening. But I believe we truly won't see a complete recovery until the number of foreclosures and excess housing inventory normalizes again.

20-City Metro Area (June 07-June 08 change)

Atlanta: -8.1%
Boston: -5.2%
Charlotte: -1.0
Chicago: -9.5%
Cleveland: -7.3%
Dallas: -3.2%
Denver: -4.7%
Detroit: -16.3%
Las Vegas: -28.6%
Los Angeles: -25.3%
Miami: -28.3%
Minneapolis: -13.9%
New York: -7.3%
Phoenix: -27.9%
Portland: -5.8%
San Diego: -24.2%
San Francisco: -23.7%
Seattle: -7.1%
Tampa: -20.1%
Washington D.C.: -15.7%

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