U.S. Home Prices Up In July in 20 Major Cities
STEVE INSKEEP, host:
On a Wednesday morning, it's MORNING EDITION from NPR News. I'm Steve Inskeep.
RENEE MONTAGNE, host:
And I'm Renee Montagne.
We'll check up, this morning, on two spots in the changing global economy. In a moment, we'll hear of hard times in a major U.S. trading partner, Britain. We begin here at home.
INSKEEP: Housing prices in much of the U.S. seem to have stabilized. Data released just yesterday show that between June and July prices actually increased in the vast majority of cities. That's according to something called the S&P/Case-Shiller Home Price Index.
NPR's Chris Arnold reports on what the index can tell us.
CHRIS ARNOLD: We figured to help us understand the latest numbers in this Case-Shiller Home Price Index, who better to call than Karl Case? He is an economist who helped to design it. He is the Case in Case-Shiller. We tracked him down at a big economics event in Germany. What's your reaction to this, this latest round of data?
Professor KARL CASE (Economics, Wellesley College): Well, there is some real interesting stuff in it. The housing market needed to stabilize in order for us to get out of this mess we're in. And house prices look to be stabilizing and that's very good news.
ARNOLD: Overall, home prices are still down from a year ago. But Case explains that when you look at just the past few months, prices in many areas have been rising. And now in 18 of 20 metro areas, home prices are up from the month before. Case says that's especially good news out West.
Prof. CASE: California is up substantially in all their cities. California is a quarter of the country, and it's been just terrible. You know, some of those cities are down 50 percent from peak. And it's really going up in every city faster than any place else.
ARNOLD: Between June and July prices also rose between one and three percent in Atlanta, Denver, Detroit, Miami, Boston and other cities. Case says all this is good news for the financial system. Because for one thing, with home prices starting to rise, that makes it much more likely that new home loans that are being made today won't go bad and cause more of those catastrophic losses for banks. It also suggests that prices have now fallen enough to lure in more homebuyers.
Ms. WANDA MCSMITH (ph): Hey, the door - aye, aye, aye. Oh, oh.
ARNOLD: At a townhouse outside Boston, a realtor, Wanda McSmith, is trying to stop her customer's indoor cats from escaping the house.
Ms. MCSMITH: Oh, my god, those are her babies.
ARNOLD: A home appraiser, who just came by, left the door open. But these are good problems to have, because it's getting a little busy again in the housing market. McSmith said she even saw a couple of bidding wars for houses over the summer.
Ms. MCSMITH: I had two really great buyers. We were outbid several times. And this was the starter price range, the 200 to 250 condos. We couldn't keep up. Those were moving like hot cakes. So, the market has definitely shifted. Yeah. Pay my bill.
(Soundbite of laughter)
ARNOLD: McSmith says that right now, many first-time home buyers are hustling to take advantage of an $8000 tax credit that expires at the end of November. Economist Karl Case says that the tax credit is one of the things that's been helping the market recover.
Prof. CASE: It's the low interest rates. It's the $8000 credit. It's the renewed sort of optimism in the air.
ARNOLD: Now, we shouldn't have too much of an optimism party here, I guess, right, because, you know, there are still a lot of problems. Unemployment is rising, foreclosures continue to rise. So, I mean those are factors that are going to be pushing down on prices.
Prof. CASE: Absolutely right. It could disappear very quickly. If unemployment continues to rise that's going to take its toll.
ARNOLD: Already the U.S. has the highest unemployment rate in 26 years. In another report out yesterday, consumer confidence unexpectedly fell. That's never a good sign. William Wheaton is a housing economist at MIT. He says first time home buyers are buying. But the rest of the market, people selling their old house and upgrading into another, that's still pretty slow.
Mr. WILLIAM WHEATON (Housing Economist, MIT): People never move during a recession. It's just an economically precarious time. And so, I don't see the broader market picking up for another six to ten months.
ARNOLD: Still, over the past two years, we have been checking in with Wheaton and asking him if it's a good time to buy a house for people who've been waiting for prices to stop falling. He's always said that most people should probably hold off. But this time, this might be the first time you're actually saying…
Mr. WHEATON: Don't let the train go by. You're close enough to the bottom now that you don't want to wait. Find the right house and buy it.
Chris Arnold, NPR News.