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News & Press

September 28, 2010

Home Prices Post July Rise (WSJ)
Nathan Becker and Kathleen Madigan

U.S. home prices rose again in July, according to the S&P Case-Shiller home-price indexes, though growth continued to slow as the boost from a government tax credit continued to wane.

Separately, U.S. consumer confidence fell sharply in September, as consumers see no improvement in the labor markets, according to a report released Tuesday.

Home prices began rising in April, boosted by the expiration of the first-time home-buyer tax credit that had new homeowners flocking to buy homes. Before that, they had fallen sequentially for six straight months.

Home buyers and sellers have been stuck in a stalemate for months now, with sellers reluctant to lower prices and buyers remaining on the sidelines.

Still, the housing sector faces challenges, with unemployment remaining high and the tax credit's benefits wearing off. S&P warned last month that home-price returns could slow down, noting that housing and mortgage data pointed to fewer gains in the future.

Compared with a year earlier, unadjusted July prices rose 4.1% for the index of 10 metro areas, while the 20-city index climbed 3.2%. The Case-Shiller index of 10 major metropolitan areas rose 0.8% from June, while the 20-city index climbed 0.6%.

David M. Blitzer, chairman of S&P's index committee, said that going forward, prices could "still see some residual support" from the home-buyer tax credit, which covers purchases made before the credit's expiration that close no later than Thursday. But "judging from the recent behavior of the housing market, stable prices seem more likely."

Month-to-month gainers were headlined by Detroit -- a city that has been walloped by the recession -- which saw a 1.6% gain, as well as New York, which saw a 1.3% rise. Las Vegas again led decliners, posting a 0.8% drop.