"U.S. home prices in June posted their first year-over-year increase in nearly two years as more buyers chased fewer homes for sale during the first half of 2012, according to an index released Tuesday.
The S&P/Case-Shiller index of 20 metropolitan areas showed home prices rose 0.5% from a year ago in June, ending a streak of 20 straight monthly declines. Home prices are still down by nearly 31% from their 2006 peak, returning to mid-2003 levels.
Since prices began their steep decline in 2006, they had previously posted year-over-year increases in just eight months during 2010, when home-buyer tax credits fueled a burst of sales activity.
Today, prices are rising amid sharp declines in the number of homes for sale as banks are taking back fewer foreclosed homes and traditional sellers have held out for better prices. Meanwhile, record-low mortgage-interest rates have dramatically increased the purchasing power of buyers. Also, investors have scooped up bargain-priced foreclosures that can be converted into rental properties....
"We seem to be witnessing exactly what we needed for a sustained recovery; monthly increases coupled with improving annual rates of change," said David Blitzer, chairman of S&P's index committee. "The market may have finally turned around.". . .
The housing market still faces stiff headwinds, including tight lending standards, an economy that isn't producing large job or wage gains, and high levels of homeowners who are underwater, or owe more than their homes are worth.
But rising home prices will help shrink the glut of underwater borrowers and could help buoy consumer confidence. It is also minimizing the feared damage from the "shadow inventory" of mortgages that are in some stage of delinquency or foreclosure."
Finally, the bottom may be in for housing, and if so, that's a good thing.
That said, it will be many years before the pricing peak of 2006 is regained.
At least we're apparently no longer moving in the wrong direction.
As with holes, we can't get out until we stop digging.
Apparently we've now done that in housing.
While no cause for celebration, it is good news.