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We finally had some good news in housing today (ok, modestly good news). The Case-Shiller Index of home prices in 20 leading cities showed a very slight advance in May. Not any second derivative stuff, but an actual real live gain.

The gain was tiny but at least it’s a gain. This ends a run of 34 straight months of declines.

The S&P/Case-Shiller home-price index rose 0.5 percent from April, the first monthly gain since July 2006 and biggest since May of that year, the group said today in New York. The measure was down 17.1 percent from May 2008, less than forecast and the smallest year-over-year drop in nine months.

Price declines may keep moderating as demand steadies and distressed properties account for a smaller share of transactions. Even so, rising unemployment, stagnant confidence and the loss of wealth caused in part by the drop in property values mean a rebound may be slow to take hold.

“After three years of this nasty housing recession, I think we’ve got to be pleased with such an improvement in a relatively short period,” said Harm Bandholz, U.S. economist at UniCredit Research in New York.

Economists forecast the index would drop 17.9 percent from a year earlier, according to the median of 32 projections in a Bloomberg News survey. Estimates ranged from declines of 17.5 percent to 18.3 percent.

Compared with a month earlier, 14 cities showed price gains, led by a 4.1 percent jump in Cleveland and a 1.9 percent increase in Dallas.

Home prices in Las Vegas and Phoenix are more than half off their peak.

Posted by edelfenbein at July 28, 2009 10:55 AM