National property prices in the US increased 1.6% in May, the largest month-on-month increase since July 2005, according to the latest index to be published.
But experts are warning against any talk of a recovery in the real estate sector as the economic situation is still unstable.
The index from default management and residential valuation provider Integrated Asset Services is in line with other recent price ratings. Its shows positive monthly rises for all four US Regions. The Northeast was up 3.2% since April, the Midwest gained 1.9%, the South 1.1% and the West 0.9%.
But property prices are still down 10.5% since last year and IAS warns against too much optimism. ‘Two months’ worth of positive data hardly signals a turn in the national housing market, but we have to be encouraged by what we’re seeing in several important counties and neighborhoods,” said IAS president and CEO Dave McCarthy.
The IAS House Price Index, which tracks monthly changes in the median sales price of detached single-family residences across the US, found that nine of the 10 largest metropolitan statistical areas (MSAs) posted substantial recoveries from just two months before.
Boston and Chicago posted 3.7% and 1.5% respectively, while San Francisco was up 3%, Los Angeles 2.8% and San Diego 1.2% from April. Denver gained 0.4%, but Las Vegas continued to slide, falling 0.9%.
But increases in sales figures and affordability for existing homes tend to mask more unstable conditions, according to the first report in a series on economic recovery by Moody’s Investors Services.
While mortgage rates are at record low levels, Moody’s analysts point out that underwriting requirements have sidelined many potential property buyers. And although consumer confidence began to recover earlier in the year, it remains at the same level it was in the last quarter of 2008.
‘The situation is still quite precarious, with progress to date and further progress hindered by rising unemployment and the massive level of actual and expected foreclosures flooding the market,’ its report said.
‘Our conclusion is that while the US economy and homebuilding industry may have inched away from being green around the gills, they are a far cry from sprouting green shoots,’ it added. The report ties housing recovery with the nation’s overall economic stability. It calls for more governmental intervention to boost effective foreclosure mitigation efforts. ‘To date, the Obama administration’s foreclosure mitigation plan has not had a meaningful impact,’ it concluded.