After nearly six years of free-fall, home prices may have finally hit bottom and are on the way back into positive territory, building equity for millions of Americans.
Property values increased in every metropolitan area tracked by the Standard & Poor's/Case-Shiller Home Price Index in May on a month-over-month basis. Overall, nationwide prices spiked 2.2 percent from April, but depreciated slightly from a year earlier.
In the past year, the 20-city index dipped 0.7 percent, representing the smallest annual decline experienced since September 2010.
"With May's data, we saw a continuing trend of rising home prices for the spring," said S&P index committee chairman David M. Blitzer. "On a monthly basis, all 20 cities and both Composites posted positive returns and 17 of those cities saw those rates of change increase compared to what was observed for April."
Specifically, Atlanta, Chicago and San Francisco recorded the most significant increases from April, the report said. In contrast, although price still increased, Charlotte, Detroit and San Diego experienced the smallest gains.
Additionally, Las Vegas was also recognized for gaining traction in its local real estate industry. Home prices in the area rose on both a month-over-month and annual basis, but remained nearly 60 percent below peak levels.
Thinning home inventory
A recent decline in the number of available homes on the market may have caused the spike in homes prices. Most recently, the total existing-home supply, including single-family homes, condominiums, co-ops and townhouses, declined 3.2 percent in June to just 2.39 million units, according to a report from the National Association of Realtors. While this may only seem like a slight decline it was 24.4 percent below levels experienced a year earlier.
"Despite the frictions related to obtaining mortgages, buyer interest remains solid," said NAR chief economist Lawrence Yun. "But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets."
However, as a result of fewer options, the sales rate last month fell 5.4 percent from the previous month to an annualized rate of 4.37 million homes, although, the report indicated that a significant share of these transactions were for foreclosed houses.