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Crisis In The Housing Market

How Patient Are Homeowners?

In the Case-Shiller index, the median home price in January, 2000 is equal to 100. The index isn't adjusted for inflation. Alyson Hurt/NPR hide caption

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Alyson Hurt/NPR

Home prices continued to creep upward in June, even as a bunch of other indicators this summer have suggested trouble in the housing market.

Prices rose 1 percent between May and June, and 4 percent over the previous year, according to this morning's Case-Shiller numbers.

It's a reminder of how sticky home prices are: People who are selling can often afford to be patient, waiting through a soft market to hold out for a higher price.

But there's a limit.

There's a year's worth of existing homes on the market — about twice as much as normal. That's a lot of homeowners biding their time. The oversupply suggests that, at some point, prices will start falling again.

In a note this morning, Ian Shepherdson of High Frequency Economics wrote that another small gain is possible for July,  "but we expect sharp declines beginning in August."

Here's how S&P put it, when it released the Case-Shiller numbers today:

Housing prices have rebounded from crisis lows, but other recent housing indicators point to more ominous signals as tax incentives have ended and foreclosures continue.

Between May and June, prices rose in 17 out of the 20 metro areas Case-Shiller tracks. Vegas was down slightly, and prices were flat in Seattle and Phoenix.