Case-Shiller Composite Indices Rise for Fourth Month

Data through July 2011, released by S&P Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed a fourth consecutive month of increases for the 10- and 20-City Composites, with both up 0.9% in July over June. Seventeen of the 20 MSAs and both Composites posted positive monthly increases.

However, according to a story in the L.A. Times:

The month-over-month bump is most likely due to the seasonal boost the housing market gets over the summer and will most likely do little to cheer economists about the housing market's future.

"While we have now seen four consecutive months of generally increasing prices, we do know that we are still far from a sustained recovery," David Blitzer, chairman of the S&P index committee, said in a release announcing the new data Tuesday.

The rise in prices made for the fourth consecutive month of gains. Earlier this year the index pushed below its previous bottom hit in April 2009, confirming a much-feared double-dip, but has come back above that level since.

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Falling prices boosting sales of existing homes

We've certainly been seeing this trend here in California, and now it appears it's also gone national: as prices plummet, home buyers (many investors hoping to hold on and rent homes out for cash flow) rush into the market. So does that potend a bottom or is this market still feeding on itself? From a Wall Street Journal story:

Home resales rose 5.1% to a 4.72 million annual rate from 4.49 million in January, the National Association of Realtors said Monday. About 45% were foreclosure and short sales.

The large number of these distressed property sales is driving prices lower. The median price for an existing home fell 15.5% last month to $165,400. Falling prices depress demand, contributing to the high inventory that is a factor keeping prices down. Inventories of previously owned homes rose 5.2% at the end of February to 3.8 million available for sale, which represented a supply of 9.7 months at the current sales pace...

Homeowners still engaging in "Homeallucination"

According to a recent AP story, many homeowners throughout the country are still engaging in what economist Chris Thornberg of Beacon Economics has dubbed "homeallucination." It means that although home values around your neighborhood have fallen, somehow you think yours is different. Special. Somehow immune to declines. In other words, what your therapist might gently call "denial." From the story:

Despite dismal housing headlines and reports showing falling prices nationwide, owners in some once-hot areas still believe their home is gaining value or at least holding its own. And by hanging onto too-high expectations, sellers are unwittingly keeping the market from finding a bottom...

A recent Coldwell Banker report showed that more than three-quarters of its real estate agents surveyed said most sellers have unrealistic initial listing prices for their homes.

Likewise, an unscientific study released last week by real-estate Web site Zillow.com found that half of homeowners polled think their home's price has increased or stayed the same in the past year.

"We expected people to get a little more in touch with reality especially over the summer, because you couldn't turn on the TV or read the newspapers without seeing that home prices are falling," said Amy Bohutinsky, a spokeswoman for Zillow.com. "It was very surprising to see this kind of disconnect."...

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