Instant View: Home prices rise more than expected in June

NEW YORK (BestGrowthStock) – Prices of U.S. single-family homes gained more than expected in June and rose in the second quarter, reflecting the lingering boost from homebuyer tax credits that ended in April, Standard & Poor’s/Case Shiller home price indexes showed on Tuesday.

KEY POINTS: * The S&P/Case Shiller composite index of 20 metropolitan areas rose 0.3 percent in June from May on a seasonally adjusted basis. The rise was better than the 0.2 percent increase expected by economists polled by Reuters, though slower than the 0.5 percent rise in May. * Unadjusted, the 20-city index gained 1 percent following May’s 1.3 percent jump. S&P, which publishes the indexes, also said home prices nationally rose 4.4 percent in the second quarter after a 2.8 percent drop in the first quarter. * Prices rose in 17 of the 20 metro areas in June, S&P said, adding that in the first half of the year 15 of the 20 areas had positive annual growth rates. The housing market is in better shape than a year ago, S&P said.

COMMENTS:

HUGH JOHNSON, CHIEF INVESTMENT OFFICER, HUGH JOHNSON ADVISORS LLC, ALBANY, NEW YORK:

“It’s good news that it was up, and good news that it was higher than forecast. But these numbers tend to jump around a great deal each month, and so they’re not the market movers that they might ordinarily be. It’ll have a modest positive impact on markets but not a significant positive impact. It doesn’t say that housing is back on firm footing, and we’re a long way from that. There still is the need for help, and that help probably will come from the federal government.”

STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO.

“It’s too early to say it’s the start of the trend given the economic concerns that have been overshadowing the markets. We do have lower rates but we do have the unemployment situation being where it is, being tenuous. We’re not getting a strong sense of confidence on this.”

YELENA SHULYATYEVA, U.S. ECONOMIST, BNP PARIBAS, NEW YORK:

“We do not take this report as a signal of future strength. This is still probably the effect from the tax credits. We know home sales plummeted in July. Unless there is improvement in employment, we think home prices will be under pressure throughout this year and into next year.”

VASSILI SEREBRIAKOV, SENIOR CURRENCY STRATEGIST, WELLS FARGO, NEW YORK:

“It looks like a little firmer than expected. One of the worries in the market is that with broadly weaker housing numbers, prices are going to start dropping again. I think those fears will be somewhat calmed by this report. As far as whether it changes the overall picture of the U.S. economy, well, probably not. The view is the economy remains very weak. But it does alleviate some of the worst fears of the housing market. It’s still hard to see where a pick-up in the U.S. economic data is going to come from. There are few signs that such a pick-up is around the corner, so the bias is still for a weaker outcome.”

GARY SHILLING, PRESIDENT OF A. GARY SHILLING & CO., SPRINGFIELD, NEW JERSEY:

“It did show a bit of an increase, but of course this is data through June. This is a quarterly number, so it reflects the period during which the tax credit was in effect. As a result, I don’t think this is terribly indicative of what’s happened since then. The data we’ve seen for July suggests considerable weakness in both sales and prices. This is the last hurrah of the tax credit.”

MARKET REACTION: STOCKS: U.S. stock index futures rose slightly. BONDS: U.S. Treasury debt prices trimmed gains modestly. DOLLAR: U.S. dollar was little changed.

Instant View: Home prices rise more than expected in June