Conditions in the U.S. housing sector improved a bit more than expected in April, as home prices in 20 major cities rose 3.8% on a year-over-year basis, according to the S&P/Case-Shiller U.S. National Home Price survey. They rose 2.4% year-over-year in March.
Home prices in the 20-city index also rose 0.8% from March to April -- the first month-to-month increase in half a year, Case-Shiller said.
Economists surveyed by Bloomberg had expected home prices to rise 3.5% in April on a year-over-year basis.
Meanwhile, the S&P/Case Shiller 10-city index rose 4.6%, on a year-over-year basis, and 0.7% from March to April.
David M. Blitzer, chairman of the Index Committee at Standard & Poor's, said that although the April data indicated improvement in the housing sector, the gains were enhanced by the expiration of the home buyer tax credit in April, and were not as broad-based as one could wish for.
Gains Were Concentrated in California
"Home price levels remain close to the April 2009 lows set by the S&P/Case Shiller 10- and 20-City Composite series. The April 2010 data for all 20 MSAs [metropolitan statistical areas] and the two composites do show some improvement with higher annual increases than in March's report. However, many of the gains are modest and somewhat concentrated in California," Blitzer said, in a statement. "Moreover, nine of the 20 cities reached new lows at some time since the beginning of this year. The month-over-month figures were driven by the end of the federal home buyer tax credit program on April 30."
Year-over-year percentage price changes in some major U.S. cities included: New York, down 1%, Chicago, down 1.6%, Boston, up 4.9%, Washington, D.C., up 7.3%, Atlanta, up 0.2%, Tampa, down 2.4%, Miami, down 0.5%, Dallas, up 3.3%, Denver, up 4.4%, Los Angeles, up 7.8%, San Francisco, up 18%, and Seattle, down 2.8%.
Overall, April's home price report represents only a small victory for the U.S. housing sector. The 3.8% year-over-year gain and the 0.8% rise in April are positive developments, but economists generally agree that the now-lapsed home buyer tax credit likely boosted sales and prices. If demand is not strong enough to support prices without the support of the tax credit program, home prices could retrench in May or June.
For now, the modestly positive numbers in April report are a signal that the negative wealth effect may be dissipating -- but it will take two or three more months of data before economists and real estate agents can predict whether the U.S. housing sector will continue to recover.
U.S. Home Prices Rose a Better Than Expected 3.8% in April