Housing Market Continues to Heal as Home Prices Rise Again

Prices continue to rise, but the housing market could be in for a bumpier ride this fall and winter.

Graph that represents increase

It's a steep upward climb, but home prices continue to gain ground, according to the widely followed S&P/Case-Shiller Home Price Indices released Tuesday.

Nationally, property values inched up more than 1 percent in the second quarter, while both the 10- and 20-city composites the indices track saw month-over-month gains of more than 2 percent. It's the first time all three readings showed positive annual growth since 2010.

Only the Charlotte, N.C. and Dallas, Texas metro areas saw a slowdown in their annual price appreciation rates.

"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, a spokesman for S&P, in a statement. "The market may have finally turned around."

But although prices have been gaining for the past few months, a bumpier road could be ahead, especially as the hot spring and summer sales months drift into the more staid fall and winter months.

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"We do expect declines in the Case-Shiller indices in the back half of this year, particularly as the overall monthly sales volume declines, thereby increasing the percentage of foreclosure re-sales in the transactional mix being tracked by Case-Shiller," Zillow Chief Economist Stan Humphries wrote in an E-mail.

Foreclosures tend to sell at relatively deep discounts and a higher percentage of those types of properties in the sales mix in coming months could skew price data downward.

Still, most economists are confident that the worst of home value declines are in the past even if foreclosures leaking into the market and negative equity continue to subdue the housing market recovery as a whole.

"We're still a few years away from a normal housing market," Humphries said.

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