Home prices climb across the country

By Peter Schroeder - 09/25/12 09:24 AM ET

Home prices climbed 1.6 percent in major cities nationwide in July, providing further evidence the housing market might finally be getting back on its feet.

Prices were up 0.2 percent and are up 3.7 percent year-over-year, the Federal Housing Finance Agency reported on Tuesday, and the previously reported 0.7 percent increase in June was revised downward to 0.6 percent.

However, when those gains were adjusted to account for seasonal fluctuations, home prices posted more modest gains of 0.4 percent, according to the latest report from Standard & Poor's/Case-Shiller Home Price Indices.

Nonetheless, the steady showing of gains across the 20 cities tracked by the index is a positive indication for a sector of the economy that has struggled to get back on its feet since the subprime mortgage collapse roughly six years ago. Prices were up 1.6 percent in all 20 cities tracked in July, the third straight month that prices have risen in every city. Nationally, just four cities — Atlanta, Chicago, Las Vegas and New York — have seen home prices decline over the last year.

“The news on home prices in this report confirms recent good news about housing. Single-family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing," said David M. Blitzer, chairman of the index committee at Standard & Poor's. "All in all, we are more optimistic about housing. Upbeat trends continue."

While home prices are showing recent gains, they have a long way to go to make up for value lost during the housing crisis. Home prices are still roughly 30 percent lower than they were at the peaks of summer 2006. Atlanta, Detroit and Las Vegas are still showing home prices below where they stood in 2000, and Cleveland finally moved past 2000 levels in the new report.

A housing recovery is key to more robust economic growth, the main theme in the presidential election.

President Obama and Republican nominee Mitt Romney haven't talked much about housing on the campaign trail despite its ties to economic growth. The central issue has been the job market and its lack of expansion, especially through the summer. The next government jobs report is due out Oct. 5, and there will be another the Friday before the Nov. 2 election.

The improvement in the housing sector might also be fueling consumer confidence, which hit a seven-month high in August.

The Conference Board said consumer sentiment was up to 70.3, an improvement from 61.3 in August, which was revised higher. A reading of 90 indicates a healthy recovery.

Confidence is closely watched because it provides an indicator of consumer spending, which represents about 70 percent of economic activity.

—Vicki Needham contributed.

This post has been updated.