U.S. House Prices Rise In July For Third Straight Month

The S&P/Case-Shiller composite index of house prices in 20 metropolitan areas rose 1.6 percent in July from June, more than triple the estimate of a 0.5 percent rise found in a Reuters poll. The index rose 1.4 percent the month before, S&P said today. The 10-city index gained 1.7 percent in July after a 1.4 percent rise the previous month. Today's report seems consistent with the 0.3% rise in the July Federal Housing Finance Agency's (FHFA) House Price Index released earlier this month.

One has to be careful to read too much into the one month data because foreclosures were down in July and these can have a dramatic impact on prices. In addition, the American Recovery and Reinvestment Act $8,000 First Time Buyer credit which expires on Dec. 1, 2009 has had a very positive impact on home sales in the past months so it remains to be seen if the trend continues.

In a live interview from Boston on "Squawk On The Street" this morning, Leif Thomsen, Mortgage Masters President and CEO, commented that mortgage and home sale activity have increased and urged that the first time buyer program be continued in its current form for several months. He even said that small bidding wars for lower priced homes have been occurring, but that the market for Jumbo mortgages is still soft.

All 20 metro areas showed an improvement in the annual rate of decline in July compared with June and only two cities, Seattle and Las Vegas, showed month-to-month declines according to the S&P/Case-Shiller index. The monthly price increases helped the annual rates, with the yearly pace of declines in home prices slowing to a 12.8 percent drop in the 10-city index and 13.3 percent downturn in the 20-city index. Average home prices across the United States are now at levels seen in the autumn of 2003. Chicago prices were up 2.7%.