The home price picture showed further improvement with the release this morning of the S&P/Case-Shiller Home Price Indices (HPI) for May.  Both the 10-City and the 20-City composite indices increased by 2.2 percent compared to April and, while the numbers were still lower than one year earlier, the difference was substantially smaller than in April. 

The May 2012 number for the 10-City Composite was -1.0 percent compared to a year earlier and for the 20-City it was -0.7.  In April the year-over-year changes were -2.2 percent and -1.9 percent respectively and those numbers had, in turn, been a substantial improvement over those in March.  

To provide some perspective on the indices, the 10 and 20-City Composite numbers for May 2012 were 151.79 and 138.96 compared to May 2011 when they were 153.93 and 139.88.   The two composites hit and sustained peak numbers through most of 2006 within a few decimal places of 226.0 and 206.0 respectively. Measured from the peaks during this period both composites are down about 35 percent.  As of May, average home prices nationally are back to the levels of Spring 2003 for the 10-City Composite and the summer of that year for the 20-City.  The base of 100 for the indices was set in January 2000.

All 20 of the MSAs covered by the indices saw positive monthly returns in May and 17 had increased annual returns in May compared to April.  Only Boston, Charlotte, and Detroit declined and each by less than 1 percent.  Atlanta continues to be the only city posting a double-digit annual negative return, declining 14.5 percent.  Even that is an improvement over the 17.0 percent drop reported in April. 

"With May's data, we saw a continuing trend of rising home prices for the spring," David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices said.  "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.  We have observed two consecutive months of increasing home prices and overall improvements in monthly and annual returns; however, we need to remember that spring and early summer are seasonally strong buying months so this trend must continue throughout the summer and into the fall."

Some of the cities hardest hit by foreclosures and price declines seem to be roaring back.  Phoenix again had the best annual return with home prices up 11.5 percent from one year earlier.  Prices are still half what they were at their 2006 but they have been increasing steadily for the last five months.  Miami and Tampa are two other hard-hit Sunbelt cities that are now showing positive annual rates of change.  Even Las Vegas, which topped the list of cities with the most foreclosure filings for over four years, posted a positive monthly change in May and an improvement in its annual numbers.

Blitzer said that while many reports for June including new home sales, housing starts, and mortgage default rates were mixed all had improved on an annual basis.  "The housing market seems to be stabilizing, but we are definitely in a wait-and-see mode for the next few months."