Boston house prices show some spring
National index puts city among few with consecutive increases
Boston home prices on the rise!
This is not a misprint. House prices in the Boston area increased not for one, but for two straight months this spring, according to the widely tracked S&P/Case-Shiller home price index. In May, prices increased 1 percent from the previous month, following a 0.1 percent gain in April. These were the metropolitan area's first monthly price increases since July 2007.
Metro Boston was one of just five US metropolitan areas with rising house prices during that period. Other cities posting at least two months of rising prices were Charlotte, N.C., Dallas, Denver, and Portland, Ore.
David Blitzer, chairman of Standard & Poor's index committee, said Boston would recover from the housing slump sooner because home prices peaked and then began declining here much earlier than in other parts of the country.
"Boston may not be the first city to recover, but it's certainly going to be among the first cities to recover," Blitzer said. "If I'm hunting for good news, I have a better chance of finding it in Boston than in Miami."
House prices peaked in the Boston area in September 2005 and have dropped 11.9 percent since then, he said. In contrast, Las Vegas prices have plunged 31.4 percent since peaking in August 2006, nearly a year after Boston's. And Washington, D.C., prices have fallen 20.6 percent since their peak in May 2006.
The S&P/Case-Shiller index is watched closely by economists, who consider it among the most accurate gauges of housing prices. The complex index is considered highly reliable because it tracks actual prices of repeat sales of the same house. Each house's sale price is compared with its sale prices in prior transactions.
Other housing reports, such as the most recent monthly results released by Warren Group and the Massachusetts Association of Realtors on Monday, calculate the median price - or midpoint - of sales during the month. They then compare them with the median prices of a basket of homes sold in a prior period, even though the types of homes sold during that time could be very different.
Reports from local real estate groups out this week show home prices in the Boston area rising in June compared with May.
Over the past year, according to the Case-Shiller index, Boston-area home prices have dropped 6.2 percent, which puts housing values back to where they were in early 2004. Nationally, the results are much worse: The 15.8 percent decline is the steepest one-year decline in the 21 years of the index.
Housing economists said yesterday the Boston area would have to post several more months of rising prices to show a turnaround in the housing market.
Also, sales often pick up during the spring, the busiest time of the year even in a slow market, and analysts noted that the index showed Boston's prices rising last spring, too.
Michael Lynch, an economist for Global Insight, a Waltham economic consulting firm, said he would not change his forecast based on Case-Shiller's results. He predicted Boston's house prices will not start to turn up until the middle of 2009.
"We have prices falling into 2009, with your turning point coming next year," he said.
Kimberly Blanton can be reached at blanton@globe.com.
