Home prices in the Twin Cities and across the country rose slightly during April, reversing a seven-month slide and bolstering hopes that the market has turned the corner.
According to the latest Case-Shiller home price index, Twin Cities prices rose 0.5 percent from March to April and 3.8 percent compared with last year in the Twin Cities. The numbers were met with cautious optimism.
"It has been a long time since we enjoyed such broad-based gains," said David Blitzer, chairman of the index committee at S&P Indices. "While one month does not make a trend, particularly during seasonally strong buying months, the combination of rising positive monthly index levels and improving annual returns is a good sign."
The report is the latest signal that the housing market is gaining strength. New home sales are rising, foreclosure rates are falling and the inventory of homes for sale has slipped to near-historic lows.
The Case-Shiller report includes prices for 20 metro areas and two composite indices, including one for 10 cities and another for 20 cities. The 10- and 20-city composites both posted 1.3-percent gains from March to April, and like the Twin Cities, both composites were up after seven consecutive months of declining prices. Those gains were felt broadly across the country with month-to-month gains being posted in 19 of the 20 regions tracked by the composite. Detroit was the only city where the index fell.
Compared with last year, average prices are still falling across the country, but not as quickly as they once were. The 20-city composite for April was down 1.9 percent from last year, the smallest annual decline in several months. In December, for example, the index had fallen 4 percent.
The Twin Cities was among only 10 metro areas where prices were up compared with last year. Phoenix topped the list with a 8.6 percent increase; the Twin Cities index was up 3.8 percent.
Though analysts hailed the report as evidence that the housing market has turned a corner, critics say the report isn't timely because the numbers largely reflect purchase agreements that were signed 60 to 90 days earlier. The index tracks repeat sales of the same house during a rolling three-month period from February to April. The data only includes single-family houses.
Earlier this month, the Minneapolis Area Association of Realtors said that the median sale price of sales that closed during May was up 10.5 percent to $169,900. That report includes all housing types, and can be influenced by the mix of homes that are selling.
Aaron Dickinson, a sales agent with Edina Realty and a frequent market blogger, said even though the market is moving in the right direction, there's increasing evidence that the recovery isn't happening evenly or at the same pace within the same neighborhood. He said foreclosures and short sales are still a drag on prices of homes that are being sold the traditional way.
"Where it was a buyer's market 12 months ago, it has quickly become a strong seller's market today in that sub-market due to the disappearing supply and surge of new buyer demand," he said. "Some neighborhoods are still struggling with damaging levels of foreclosures and short sales."
Earlier this year, Dickinson said prices had already hit bottom. The latest Case-Shiller report is evidence to support his claim, he said.
"After collectively holding their breath for years during the housing downturn, I think we're all breathing a collective sigh of relief that the worst is behind us and that finally," he said, "tomorrow looks brighter than today."
Jim Buchta • 612-673-7376