First, the good news: Single-family home prices in the Minneapolis-St. Paul metro area have risen at the fastest rate among the 20 largest metropolitan areas in the United States in each of the past two months.
A closely watched index of single-family home prices rose 3.2 percent from May to June following a 2.6 percent rise in May. That performance ended a nine-month slide, all on a seasonally adjusted basis, according to the Standard & Poors /Case-Shiller1 Home Price Index released Tuesday.
The Twin Cities in June tied with Chicago for the highest monthly growth rate among metropolitan statistical areas (MSAs) while May’s rise put the Twin Cities alone at the top of the list.
But year on year, single-family house prices in the 13-county Twin Cities metropolitan area are down 10.8 percent from June 2010 to June 2011, the steepest drop among the 20 largest metro areas.
Nationwide, the home price index increased by 3.6 percent in the second quarter, after having fallen 4.1 percent in the first quarter. Year over year, single-family house prices are down 5.9 percent, according to S&P. Nationally, home prices are back to their early 2003 levels.
“This month’s report showed mixed signals for recovery in home prices. No cities made new lows in June 2011, and the majority of cities are seeing improved annual rates,” said David M. Blitzer, chairman of the Index Committee at S&P Indices.
Bitzer pointed to diverging performance among metropolitan areas as evidence “that we are back to regional housing markets, rather than a national housing market where everything rose and fell together.”
The trend may be slowly improving for the Twin Cities. The Minneapolis Area Association of Realtors reported sales data from July 2010 to July 2011 showing prices on single-family homes declined at 5.6 percent, a much slower rate.
Greg Sax, communications director at the association, said that last year’s first-time homebuyer tax credit boosted real estate transactions but then depressed activity in the months following the program’s end in May 2010. The results, he said, make for confusing year-over-year comparisons.
“Things are getting better, but I wouldn’t make too much of it,” he said.
Relatively strong sales and fewer new homes entering the market have drawn down available inventory. The 24,328 active homes on the market represent 18.8 percent fewer than last July.
That’s the largest year-over-year decline in inventory levels in the last seven years. Traditional listings of single-family homes for sale across the metro total 16,989 units, down 19.1 percent from a year ago.
Listed properties in foreclosure total 2,572, down 16.1 percent, and short-sale properties total 5,037, down 15.1 percent, according to the association data.
The association also reported that pending sales were up 42.7 percent over July 2010’s post-tax credit slump. Buyers entered into 4,077 purchase agreements, marking the third consecutive month of double-digit year-over-year gains in purchase demand.
In addition to the overall health of the economy, one factor still has observers guessing about the direction of home prices: There has been a slowing of foreclosures in recent months as state attorneys general press mortgage companies and banks to settle “robo-signing” irregularities in their foreclosure paperwork process.
If “shadow inventory” of properties currently not on the market were listed, that also would depress prices, Sax observed.