US home prices up for 1st time in 3 years

Index of 20 major cities rises on a monthly basis for the first time since July 2006, hinting that the worst of the declines may be over.

NEW YORK ( -- The value of U.S. homes grew on a monthly basis in May for the first time in nearly three years, according to 20-city index released Tuesday. The month-over-month increase was 0.5%, according to the report from financial data company Standard & Poor's and economists Case-Shiller. It was the first increase in the monthly index since July 2006.On an annual basis, home prices in the 20 cities fell 17.1%, but it was the second straight month that the year-over-year decline lessened. "This could be an indication that home price declines are finally stabilizing," said David Blitzer, chairman of the index committee S&P, in a prepared statement. While acknowledging that the report was good news, Mark Zandi, chief economist for Moody's, downplayed the importance of a single month's statistics." I think it's a temporary respite," he said. "It reflects the recent decline in foreclosure sales, and prices will continue to fall over the next several months." Robert Shiller, the Yale economist who co-founded the index and who's famous for warning that the housing boom was, in fact, a bubble, said the decrease in foreclosure sales does show up in the index statistics as a plus for home prices. That's one reason he did not want to sound too optimistic; foreclosures could take off again. "And we could get more economic bad news, but it does look encouraging," he said. He added that he thought that Washington's efforts have boosted the nation's spirits, an important factor for the housing market. "The government has done a lot to support the housing market," he said. "Confidence has improved. People are talking about 'green shoots.' People are thinking it's time the recession came to an end. The stock market is up."

By Les Christie, staff writer

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