Residential real estate prices in the US decreased in the year ending in June at a slower pace than in the prior month. The S and P/Case-Shiller index, which measures property values in 20 cities, fell 4.5 per cent from June 2010, following a 4.6 per cent drop in the 12 months ended in May — the biggest since 2009.
What does all this economic mumbo jumbo mean in plain English? Well, it’s a sign that home prices in the US are stabilizing.
While prices are still in decline, they are doing so at a slower rate, indicating that the deterioration is generally slowing. Good news? Yes, but there’s a catch.
Since foreclosures on US homes are still occurring at a relatively rapid rate, there are more properties bogging down the market. With unemployment at around 9 per cent and strict lending rules still in effect, a recovery in home values remains years away.
The Case-Shiller measure, named for economists Karl Case and Robert Shiller, is based on a three-month average, which means the June data was influenced by transactions in May and April.
While speaking in Wyoming last week, Federal Reserve Chairman Ben Bernanke weighed in on the current state of the US housing market.
Bernanke chalked up the difficulties that the housing market is currently experiencing to “an overhang of distressed and foreclosed properties, tight credit conditions for builders and potential homebuyers, and ongoing concerns by both potential borrowers and lenders about continued house price declines.”
However, he was optimistic about the second half of 2011, as he indicated that the economy will probably improve and the central bank can help the recovery if need be. He also said that housing will stabilize “if for no other reason than that ongoing population growth and household formation will ultimately demand it.”