Home Prices Rise 2.2 Percent in May

A leading measure of home prices showed the second consecutive month of price gains.

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Bringing to an end a painfully long streak of declines, home prices rose for the second straight month in May with no cities posting new lows, according to Standard & Poor's Case-Shiller home price indexes.

Average home prices increased 2.2 percent in May over April numbers, according to the report released Tuesday, cementing the notion that the housing market is slowly healing. Prices in April rose 1.3 percent, after falling for seven consecutive months.

"May was a good month for housing with existing home sales almost 10 percent higher than year-ago levels, supply shortages in some markets, and a declining mix of foreclosure re-sales which particularly affect the Case-Shiller index," Stan Humphries, chief economist at Zillow, wrote in an E-mail.

[Read: Why Homeownership Is Stalling Even As Home Sales Improve.]

"Overall we remain cautiously optimistic that home values are at a bottom nationally even while our expectations for price appreciation in the next couple of years are muted," he added.

A tightening supply of homes for sale coupled with stronger buyer demand has put upward pressure on home prices, according to experts. Rock-bottom mortgage rates, slightly looser credit availability, and improving job growth have also nudged more house-hunters from window-shopping to the contract table.

Still, prices overall are down more than 30 percent from their peak in 2006 and experts caution that more monthly price declines could be on the way, primarily because spring and summer tend to be strong buying months.

According to the chairman of S&P's index committee David Blitzer, the current upward trend in prices must continue through summer into fall to really signal the housing market has found its footing.

"The housing market seems to be stabilizing," he said in a release Tuesday. "But we are definitely in a wait-and-see mode for the next few months."

Meg Handley is a business reporter for U.S. News & World Report. You can reach her at mhandley@usnews.com and follow her on Twitter.