- The Washington Times - Wednesday, August 26, 2009

Home prices in 20 U.S. metropolitan areas increased for the second month in a row in June, providing more evidence that the crisis in the housing market may be easing after causing the worst economic downturn in seven decades.

Meanwhile, consumer confidence rebounded in August as households became less worried about the labor market, the Conference Board reported Tuesday. Its consumer confidence index jumped to 54.1 this month from 47.4 in July.

Consumers have been in the doldrums in recent months as a result of stagnant or falling wages and incomes and a rising unemployment rate, which hit 9.4 percent in July and is expected to reach 10 percent before the end of the year. But the economy appears to be recovering from its longest, deepest postwar recession.

“Consumers were more upbeat in their short-term outlook for both the economy and the job market in August, but only slightly more upbeat in their income expectations,” said Lynn Franco, director of the Conference Board’s consumer research center. “As long as earnings continue to weigh on consumers’ minds, spending is likely to remain constrained.”

June marked the first time that housing prices have risen for two consecutive months since the housing bubble reached its peak during the summer of 2006, according to the 20-city composite index of the S&P;/Case-Shiller National Home Price Index, which was released Tuesday.

After the housing bubble burst, record rates of foreclosures placed huge numbers of distressed properties on the market. That exerted downward pressure on prices and eventually led to an increase in housing demand, analysts said. The $8,000 tax credit for first-time homebuyers, which expires Nov. 30, has also spurred demand. And historically low mortgage rates have recently increased demand for homes as well.

Compared with June 2008, home prices in the 20-city index were still down 15.4 percent in June 2009. However, that is an improvement from the recent 12-month record loss of 19.1 percent.

“For the second month in a row, we’re seeing some positive signs,” said David M. Blitzer, chairman of the index committee. “There are hints of an upward turn from a bottom. However, some of the hardest-hit cities, especially in the Sun Belt, show continued weakness.”

Eighteen of the 20 metropolitan areas experienced price increases in June. Washington-area prices jumped 2.8 percent in June after rising 1.3 percent in May. Home prices in Detroit and Las Vegas continued to decline in June.

The S&P;/Case-Shiller National Home Price Index, which is calculated quarterly, increased 2.9 percent during the second quarter, compared with the January-March period. It was the first quarterly rise in three years.

Nationally, home prices last quarter were similar to prices that prevailed in early 2003. Average home prices were more than 30 percent lower last quarter than their peak in the second quarter of 2006, the S&P;/Case-Shiller report showed.

“This home-price data, together with the sharp second-quarter recovery in the stock market, suggest household net worth rebounded sharply [by $2 trillion] in the second quarter following seven quarters of the worst declines since the early 1930s,” said Charles McMillion, chief economist of MBG Information Services. The economic crisis “wiped out $13.9 trillion of household net worth between the second quarter of 2007 and the first quarter of 2009,” Mr. McMillion noted.

The National Association of Realtors reported last week that existing-home sales increased for the fourth month in a row in July. That streak had not been achieved since 2004. July’s 7.2 percent gain was the biggest monthly rise since comparable records were first compiled in 1999.

The Commerce Department on Wednesday was expected to report that new-home sales increased for the fourth straight month in July.

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