U.S. home prices rose in August for the third straight month, indicating housing recovery after a steep three-year decline. But, will it last?The Standard & Poor's/Case-Shiller home price index shows a dramatic turnaround. For three months straight--June, July and August--home prices in 15 metro cities were on the rise. San Francisco, Minneapolis and San Diego led the turnaround.
However, prices are still extremely low compared to 2006. For example, an Associated Press article reports that Miami's prices have climbed for three months in a row, however they're still only half the price of an average price for a Southern Florida home in 2006.
What does this mean? Zach Pandl, an economist at Nomura Global Economist believes prices are still destined to bottom out before they begin to recover for good in 2010.
"We need to see flat to rising prices in the winter months," Pandl says. "That would be a very encouraging sign that prices have bottomed out." This is likely to be true. As foreclosures and unemployment rise, and a tax credit for first-time homebuyers expires next month, home prices may fall once again.
An expired tax credit due next month has caused congress to consider prolonging the tax credit into next year. An increase of the credit is in the works as well. The increased tax credit will help first-time buyers, by saving them 10 percent of the sales price, up to $8,000. What's backing supporters? This month of October, the U.S. economy has declined once again, and the Consumer Confidence Index fell 6 points from September, now down to its lowest level since May.
Although the rising home prices are widespread, they're certainly not everywhere. Seattle, Las Vegas and Charlotte N.C. have fallen to their lowest levels since August. The largest feast-to-famine city? Las Vegas. After the city's peak in August 2006, home prices have since fallen 56 percent.
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