Home prices in the Twin Cities metro area rose faster than anywhere else in the nation -- 2.8 percent -- from April to May, according to the Standard & Poor's Case-Shiller report released Tuesday.
Nationwide, prices rose 1.3 percent for the same period, according to a composite of 20 metropolitan statistical areas -- not a surprise to most analysts who said that the increase was due in large part to a seasonal increase in sales, and by the federal home buyer tax credit, which expired at the end of April.
David Blitzer, the chairman of S&P's index committee, said that while the numbers are "somewhat positive," they're not evidence of a sustained recovery. "Since reaching its recent trough in April 2009, the housing market has really only stabilized at this lower level."
The numbers represent only single-family homes and do not include new home sales, condominiums or townhouses. Foreclosures and bank-owned listings, which represent an increasingly large share of all home sales, are included only if they are sold on the open market. These numbers are not seasonally adjusted.
More comprehensive local data, which include distress sales in addition to condos, townhouses and single-family houses, reflect a similar trend. From April to May the median sale price of all home sales in the Twin Cities rose from $169,800 to $175,000 -- a 3.1 percent increase, according to data compiled by the Minneapolis Area Association of Realtors for the Twin Cities metro area. From May to June, the latest local data that's available, sale prices rose 4 percent.
Brad Fisher, a sales agent for Edina Realty and president of the Minneapolis Area Association of Realtors, said that because local data had already been released, he wasn't surprised by the Twin Cities' stellar performance.
"It's a good number to read, but it's not like we didn't expect it going into this," Fisher said. The May sales numbers represent demand that was created by the federal tax credit, which helped boost sales earlier in the year as people accelerated their plans to buy houses.
Recent sales activity has fallen. For the week ended July 17, pending home sales in the Twin Cities fell almost 40 percent compared with the same time last year. At the same time, the number of new listings fell 10 percent, increasing the overall number of active listings on the market by almost 5 percent.
Fisher said that there's been some upward pressure on median sale prices because a growing share of the sales are short sales, rather than bank-owned listings. Short sales are deals that involve houses that are "upside down," or have a mortgage that is higher than the value of the house. They happen when lenders agree to sell the house for less than what is owed on the mortgage, and they tend to be more expensive than bank-owned listings, which now represent a smaller percentage of home sales than short sales.
Nationwide 15 of the 20 metro areas in the Case-Shiller report showed year-over-year improvement in the annual comparison. Las Vegas led the decliners at minus 6.5 percent. In the month-to-month comparison, 19 of the 20 regions showed an increase. Beleaguered Las Vegas fell 0.5 percent.
Even when adjusted for seasonal factors, both the 10-city and 20-city indexes for May rose 0.5 percent compared with the previous month.
Fisher said the real estate of the market will be revealed as the effects of the tax credit wears off.
"We have to see the tax credit go by a couple months before we know what's going on," he said.
Jim Buchta • 612-673-7376