A new report from S&P/Case Shiller reveals the downward trend in home prices finally broke in April. After eight consecutive months of decline, home prices in the 20-city index actually rose 0.7 percent in April compared with March.
Too Early to Tell if Price Increase Is Permanent
The increase in prices is welcome to many home industry leaders who have been waiting for a change in the downward trend. However, because the market has been struggling for so long, it’s possible the increase is only temporary.
David Blitzer, a spokesman with S&P, stated it was a welcome surprise that April numbers beat March. However, he thinks the shift could be attributed to the changing seasons. ”It is much too early to tell if this is a turning point or simply due to some warmer weather,” he explained.
The massive drop in prices over the last quarter and past year had a lot to do with the record number of foreclosures that hit the market last year. With so many empty homes saturating neighborhoods and demand dropping due to economic issues, home prices suffered across the nation.
An increase in home prices usually signals an increase in demand for homes. So now the industry is watching to see if the April numbers mean the economy has provided enough financial stability and confidence for consumers to obtain more mortgages, or if the activity will only pick up slightly during the warm-weather months when more home sales traditionally occur.
Prices Rose in Metro Washington, Fell in Detroit
The S&P report brought with it good and bad news among the 20 cities covered. In April, metropolitan Washington was the strongest of the cities with prices rising 3 percent in April. However, this has been a trend for the area as prices have been on the plus side for a while with year-over-year increase 4 percent.
Other cities that experienced an increase in prices include San Francisco, Seattle and Atlanta.
The city with the biggest decline in prices was Detroit. There, home prices fell 2.9 percent month-over month. Other cities with April one-month price declines include Chicago, Charlotte, Las Vegas, Miami and Tampa.
As for the biggest year-over-year drop, Minneapolis took the crown with prices plunging 11.1 percent since last year.
