Home price rise fails to lift housing gloom
By Lucia Mutikani
WASHINGTON (Reuters) - Prices for new single family homes rose to a five-month high in June even as sales slipped, but recovery for the broader housing market continues to be frustrated by an oversupply of properties.
The Commerce Department said on Tuesday the median sales price for a new home increased 5.8 percent last month to $235,200. Compared to June of last year, prices rose 7.2 percent.
Indications that home prices were starting to stabilize were also evident in the S&P/Case Shiller survey, whose composite index of prices in 20 metropolitan areas was flat in May after a 0.4 percent gain in April.
Analysts, however, said firming prices would likely be short-lived given the huge supply of homes on the market.
"Sales are the key and the surge turns into a torrent only if the sales firm or much more time passes," said Michael Montgomery, a U.S. economist at IHS Global Insight in Lexington, Massachusetts.
New home sales fell 1 percent to an annual rate of 312,000 units in June. A report last week showed sales of previously-owned homes fell to a seven-month low in June, but average prices rose 0.8 percent to $184,300 from a year ago.
"We have been expecting an increase in home prices in the spring as distressed sales become a smaller share of activity amid a seasonal pick-up in voluntary sales," said Michelle Meyer, a senior U.S. economist at Bank of America Merrill Lynch in New York. "This will likely reverse in the winter, dragging down prices again." Continued...