Home prices in 20 U.S. cities climbed in June from a year earlier, the first gain in almost two years, indicating the market that triggered the recession is beginning to rebound.
The S&P/Case-Shiller index of property values in 20 cities increased 0.5 percent from June 2011, the first gain since September 2010, a report from the group showed today in New York. The median forecast of 29 economists surveyed by Bloomberg News called for a 0.05 percent drop. Nationally, prices jumped last quarter by the most in more than six years.
Rising demand driven by mortgage costs close to a record low has trimmed the glut of unsold houses on the market, giving property values a lift. Waning foreclosures and more access to credit would further stabilize the industry, and may bolster consumer confidence and spending.
“Sales are continuing to improve so that’s going to be supportive of prices,” Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, said before the report.
Stock-index futures held earlier losses after the report. The contract on the Standard & Poor’s 500 Index maturing in September dropped 0.2 percent to 1,405.4 at 9:03 a.m. in New York.
Estimates in the Bloomberg survey ranged from declines of 1.5 percent to a 1 percent gain, according to the survey. The Case-Shiller index is based on a three-month average, which means the June data was influenced by transactions in April and May.
The 20-city index improved after showing a 0.7 percent drop in the year ended May. Year-over-year records began in 2001.
Today’s report also included quarterly national figures. Prices covering all the U.S. increased 1.2 percent in the second quarter from the same time in 2011 compared with a 1.4 percent drop in the year ended March. They jumped 6.9 percent from the previous three months before seasonal adjustment. The gauge increased 2.2 percent after taking those changes into account, the best performance since the fourth quarter of 2005.
“We seem to be witnessing exactly what we needed for a sustained recovery,” David Blitzer, chairman of the S&P index committee, said in a statement. “The market may have finally turned around.”
Home prices in the 20-city adjusted for seasonal variations increased 0.9 percent in June from the prior month. Unadjusted prices climbed 2.3 percent from the previous month.
The year-over-year gauge provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.
Thirteen of the 20 cities in the index showed a year-over-year gain, led by a 14 percent increase in Phoenix.
Atlanta showed the biggest year-over-year drop, with prices falling 12 percent.
Toll Brothers Inc., the largest U.S. luxury-home builder, reported a better-than-estimated profit and an increase in revenue for its third quarter ended July 31. The average price of the homes that the Horsham, Pennsylvania-based company delivered in the quarter climbed to $576,000 from $557,000 in the previous three months.
“The housing recovery is being driven by pent-up demand, very low interest rates and attractively priced homes,” Chief Executive Officer Douglas Yearley Jr. said on an Aug. 22 conference call with investors. “With an industry-wide shortage of inventory in many markets, we are enjoying some pricing power.”
Recent reports also indicate a pickup in demand. Purchases of new homes rose more than projected in July to match a two- year high, Commerce Department data showed last week. Previously-owned house sales rebounded from an eight-month low, the National Association of Realtors reported.
Foreclosures, though abating, are still a risk. Distressed sales accounted for 24 percent of existing-home purchases in July, the Realtors data showed. That’s less than the prior month and down from 29 percent in July 2011. Such sales are comprised of foreclosures and short sales, in which the lender agrees to a transaction for less than the balance of the mortgage.