Housing Prices Rise in May

The Federal Housing Finance Agency (FHFA) reported this morning that U.S. home prices rose 0.8% month-over-month in May, following a downward revision of the April housing price index to a gain of 0.7%. For the 12-month period ending in May 2012, U.S. housing prices rose 3.7%. The agency noted that the index is 17% below its April 2007 peak, and it is about equal to the index reading in May 2004.

The FHFA monthly index is calculated using purchase prices of houses with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac.

This month’s index indicates further that the housing market is recovering, even if very slowly. Home price website Zillow Inc. (NASDAQ: Z) noted this morning that home prices in the first quarter rose 0.2% year-over-year, the first increase since 2007. The company’s chief economist made this observation:

After four months with rising home values and increasingly positive forecast data, it seems clear that the country has hit a bottom in home values,” said Zillow Chief Economist Dr. Stan Humphries. “The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own.

Paul Ausick