Spring buying pushed home prices up for a third straight month in most major U.S. cities in June. But the housing market remains shaky, and further price declines are expected this year.
The Standard & Poor's/Case-Shiller home-price index, released Tuesday, shows prices increased in June from May in 19 of the 20 cities tracked. A separate figure shows prices rose 3.6 percent in the April-June quarter from the previous quarter. Those numbers aren't adjusted for seasonal factors.
“Part of what we’re seeing here is seasonal, but not all of it,” David Blitzer, chairman of S&P's Index Committee, told CNBC. “So this is a pretty thin river of hope.”
Over the past 12 months, home prices have declined in all 20 cities after adjusting for seasonal factors.
Chicago, Minneapolis Washington and Boston posted the biggest monthly increases. Metro areas hit hardest by the housing crisis, including Las Vegas and Phoenix, reported small seasonal increases.
"Broadly it looks like home prices have flattened out,” said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Ct. "That's good news. Earlier this year, it had looked like we were looking for another leg down. You would like to see prices to go up, but we take what we can get.”
Stanley pointed to an interesting bifurcation in the market: Distressed property values remain depressed -- a drag on home prices. But non-distressed home sales are starting to rise.
S&P's Blitzer noted that he expects housing to remain subdued for the foreseeable future with no big upswings in prices.
There was a big pickup in consumer spending in July, which means people are willing to make big purchases, he explained. But home buyers are finding it’s more difficult to get a mortgage or home financing, and that is likely to temper any gains in the housing market.