The United States housing market started to recover in June, for the first time since the economic recession. Home sales in 20 cities in the country improved due to the tax credit implemented in 2010, according to the report from Bloomberg.
The report cited data from the S&P/Case-Schiller index, and indicated a 0.5 percent increased in prices in June 2011. Data showed the housing recovery started in September 2010, and most of the price increase happened during the previous quarter.
In an interview with Bloomberg, Mohamed El-Erian, chief executive officer and co-chief investment officer of Pacific Investment Management Co., said the improvement in the housing market is not surprising, because the affordability of houses is attractive to buyers.
Robert Shiller, one of the economists who compiled the data S&P/Case-Schiller index, said in an interview with Bloomberg that people are ready for the announcement of a major turning point, but he is hesitant to call it. According to him, “I’m not ready to call it because I’ve seen a lot of these things fizzle before.”
Based on the S&P/Case-Shiller index, 13 out of 20 cities showed a year-over-year increasing in home prices. Phoenix gained 14 percent. In June, Schiller made a similar report, indicating that the housing market is improving in glamorous cities including San Francisco, Seattle, and Miami, where jobs and lifestyle are attracting wealthy investors and young professionals.
On the other hand, a report from Credit Suisse Group AG (NYSE:CS), an equity research firm, cited the 0.5 percent year-over-year increase in housing prices on the S&P/Case-Schiller index is consistent with its monthly survey of real estate agents. The research firm expects the home prices to continue to increase, due to buyer confidence and sales activity.
According to Credit Suisse, the Case-Shiller index overlooked the impact of the regional weighting on the composite data. The research firm cited that the index weights the metro areas based on the aggregate value of single-family homes. The New York City commuter market represents a 19 percent weighting in the 20 cities composite, but builders don’t have significant presence in the area.
Credit Suisse cited the New York commuter single-family market showed a 2.1 percent decline in June, year-over-year, based on its survey and on the Case-Shiller index, which brings down the index to 0.4 percent.
A previous report from the National Association of Realtors indicated a 2.3 percent increased in home sales to 4.47 million annual rate in July. Analysts projected further recovery in the housing market during the latter part of the year.