UPDATE 1-U.S. home prices prices show renewed pressure-S&P

(Adds quotes, details)

By Lynn Adler

NEW YORK, May 25 (BestGrowthStock) – Single-family home prices were
unchanged in March from February, but fell in the first quarter
under renewed pressure before federal aid for buyers faded
away, Standard & Poor’s/Case Shiller home price indexes showed
on Tuesday.

Prices have rebounded from lows hit during the crisis, yet
the end of tax incentives for home buyers, combined with
mounting foreclosures, suggests more weakness, S&P said.

Home sellers became more realistic in setting initial
prices amid a record supply of foreclosures, aiming to entice
buyers during their race to lock in tax credits before they
expired at the end of April, housing experts said.

“Overall, I think the housing market has bottomed, but it
will remain sluggish,” said BNP Paribas economist Yelena
Shulyatyeva. She doubts there will be “any upward pressure on
prices in the near future.”

The S&P composite index of prices in 20 metropolitan areas
was unchanged in March from February on a seasonally adjusted
basis, better than the 0.3 percent decline forecast in a
Reuters survey.

On an unadjusted basis, prices fell 0.5 percent in March
after a 0.9 percent February drop, worse than the estimated 0.4
percent decline.

For the first three months of the year, the national home
price index fell 3.2 percent, unadjusted, compared with a 1
percent drop in the fourth quarter. The index was up 2 percent,
however, from the same quarter a year ago — the first annual
increase in more than three years.

The 20-city index posted a 2.3 percent annual increase in
March, near the 2.4 percent forecast.

Despite improvement on a year-over-year basis, David M.
Blitzer, Chairman of the Index Committee at S&P, said the March
monthly report was not encouraging.

“It is especially disappointing that the improvement we saw
in sales and starts in March did not find its way to home
prices,” he said in a statement. “Now that the tax incentive
ended on April 30, we don’t expect to see a boost in relative

Buyers had to sign contracts by April 30 to get federal tax
credits of up to $8,000. Sales are widely seen dropping off in
the weeks after the tax credit’s end, with the rush to make
deals by April’s end subtracting from future sales.

Applications for loans to buy homes stumbled to a 13-year
low in the second week without the credit, the Mortgage Bankers
Association reported last week.

On the plus side, financial market woes in Europe have
spurred a flight to quality into U.S. Treasuries, driving down
the yields used to peg U.S. mortgage rates.

Mortgage rates near record lows under 5 percent and
improving employment conditions should put a floor under the
U.S. housing market, economists said.

(Additional reporting by Emily Flitter; Editing by Padraic

UPDATE 1-U.S. home prices prices show renewed pressure-S&P