The spring home buying season may be offering a glimmer of hope that the worst is over for the steepest housing downturn since the Great Depression.
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When seasonally adjusted, home prices were flat in May from April, with April’s numbers revised to show a gain, according to the S&P/Case-Shiller index of 20 metro areas. Prices were down, though, when compared to the same time last year.
But May was actually the second month of gains when just looking at the raw numbers.
Yale University Professor and S&P Case Shiller index co-founder, Robert Shiller, explains:
“It’s looking a little bit more positive but it’s not strong news yet. And you have to remember that we’ve been in a declining phase for most of the last five years, so I wouldn’t assume a lot about this yet. But yeah, it’s looking a little bit better.”
Some economists caution the spring buying season may be distorting a reality where homebuyers are still reluctant to sign on the dotted line, meaning the gains may be only seasonal.
“You know this budget crisis – is – even if we have a good scenario where we get a compromise, it’s going be a compromise where the government cuts spending, more people are going to be laid off, confidence is not really enhanced by that, we likely have a weak economy going forward for years. And this is the pattern we’ve established in the last couple of recessions and this one it’s worse.”
And given that economic backdrop, Shiller believes home prices can easily decline once again.
Bottom line: Housing prices rose from April to May, but were down from a year ago, and could head lower as the debt stand-off in Washington threatens to paralyze potential buyers, according to housing expert Robert Shiller.