Housing prices have now risen for the last year in more than half of major U.S. cities, marking a milestone in the historic housing collapse that set off the 2007-2009 recession and now may be nearing an end.
The S&P/Case-Shiller home price index rose 2.2% in May, beating economists’ forecasts, as all 20 of the nation’s largest metropolitan areas posted gains from April.
More important, 12 of the 20 cities now have higher prices than they did a year ago, suggesting that the improvement is durable, the report said.
The 20-city composite home-price index overall is down 0.7% in the past year. The biggest gains have come in Phoenix, where prices are 11.5% higher than 2011, and the worst performance was in Atlanta, where the home price index is down 14.5% from last May.
In addition to Phoenix, other hard-hit markets are posting some of the bigger gains in home prices, the Case-Shiller report said. Tampa and Miami are each up about 3% in the last year. Homes in Phoenix are still less than half as valuable as in 2006, and Las Vegas is down more than 60%, the report said.
The biggest month-to-month gain was a 4.5% climb in the index for metropolitan Chicago, the report said. Atlanta had the second-biggest monthly gain.
“We have observed two consecutive months of increasing home prices and overall improvements in monthly and annual returns,” says David M. Blitzer, Chairman of the index committee at S&P Dow Jones Indices. “However, we need to remember that spring and early summer are seasonally strong buying months, so this trend must continue throughout the summer and into the fall.”
Housing is expected to help the economy grow this year for the first time since the recession, according to forecasts by Bank of America Merrill Lynch and other economists.
Housing prices have dropped about 35% from their peak and the nation has shed more than 2.2 million construction jobs since early 2007, including 455,000 in residential construction, almost half the industry’s total.
Merrill’s forecast says housing prices will be close to flat this year and next, with mid-single-digit nationwide gains emerging by mid-decade.