According to the latest figures on home prices from S&P/Case-Shiller a broad-based bottom for housing markets appears to be in the making. From May to June, fifteen of the markets followed by Case-Shiller posted seasonally adjusted price increases. Three others were off slightly and nearly flat—Tampa, Charlotte, and Seattle. Only Detroit and Las Vegas continued to show serious declines. For the first time in ages, both the 10-city and 20-city indexes posted month-over-month, seasonally adjusted increases. Indexes continue to eat away at their year-over-year deficit; toward the beginning of the year, prices were off nearly 20% from the same month the previous year. That has now fallen to a drop of around 15%.
Prices fell less than forecast, and the release was generally good all around. Of course, several questions remain. Foreclosure numbers continue to grow rapidly in bubble markets in California, Arizona, and Florida, which may make it difficult to build on price increases in those places and could actually lead to a reversal. Prices have also been buoyed by government incentive programmes—including a generous tax credit that expires this fall—and low interest rates, which may not be around forever.
Finally, Case-Shiller data, always published with a significant lag, has only just made it to the month of June. July and August saw some surprising weakness in labor markets and an erosion in consumer sentiment, so prices could very well disappoint in coming months.
An end to housing price collapse would be welcome news indeed for many struggling homeowners. This is an encouraging sign that such an end has arrived, but until there is real stability in labor markets some caution is warranted.
This article originally appeared on The Economist.com