U.S. home prices posted a monthly increase for the first time in almost three years, according to the S&P/Case-Shiller Home Price Indices. Home prices inched up 0.5% for the three month period ending in May, compared with the three months ending in April. The index tracks home prices in 20 metropolitan areas.
Although home prices are still down 17% from a year earlier, the change seems to support other housing indicators that point to some encouraging signs in the housing market. So what does this mean for homeowners?
First, don't start the party yet to celebrate an end to the recession. Although the gain is positive news, that doesn't necessarily mean the nation's housing woes are at an end. There are still plenty of folks struggling to make mortgage payments. Unemployment is at 9.5% and is expected to move higher, which means even more people are at risk of being unable to pay their mortgage loans.
Second, even though it seems that the increase in home prices was partly attributed to fewer properties being sold through foreclosure or short sales (31% in June vs. 50% a year earlier), plenty of Americans are still at risk of losing their homes. RealtyTrac reports that there were 1,905,723 foreclosure filings in the first half of the year. That includes default notices, auction sale notices and bank repossessions.
Third, not all housing markets showed an increase in home prices. Homeowners in hard-hit areas such as Las Vegas, Phoenix, San Francisco, Miami, and Detroit are among those who continued to see home prices drop. Homeowners in these areas will probably still have a tough time refinancing or selling properties. But people who can qualify for mortgage loans in these areas may pick up some good deals.
Some housing experts question whether the uptick in home prices is just related to increased home buying activity as the weather has warmed up. Others say that price drops on more expensive homes will likely depress the overall housing market going forward.
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows. Visit her Web sites, www.Huffwrites.com and http://supersavvyspender.blogspot.com/.