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Business Title: Home Prices in 20 U.S. Cities Unexpectedly Climb 0.3%, Case-Shiller Says March 30 (Bloomberg) -- Home prices in 20 U.S. cities unexpectedly rose in January, indicating the housing market is stabilizing as the economy expands. The S&P/Case-Shiller home-price index climbed 0.3 percent from the prior month on a seasonally adjusted basis, matching the gain in December, the group said today in New York. The gauge was down 0.7 percent from January 2009, the smallest year- over-year decrease in three years. Cheaper homes, low borrowing costs and government incentives have combined to support the housing market, which helped trigger the worst recession since the 1930s. Gains in hiring are required to overcome mounting foreclosures that are keeping pressure on prices and posing a threat of renewed declines in real estate. “It’s a temporary stabilization,” said Joseph Brusuelas, president of Brusuelas Analytics in Stamford, Connecticut, who had forecast a month-over-month gain in the adjusted index. “Foreclosures are still going to bite the market. Given the preponderance of negative housing data, we may see another leg down.” A separate report showed consumer confidence improved in March as Americans perceived employment was starting to improve. The Conference Board’s index rose to 52.5 this month from 46.4 in February. Stocks Gain Stock advanced and Treasury securities fell after the figures. The Standard & Poor’s 500 Index increased 0.3 percent to 1,176.3 at 10:17 a.m. in New York. The 10-year Treasury note fell, pushing up the yield two basis points to 3.88 percent. A basis point is 0.01 percentage point. Seasonally adjusted home prices were forecast to fall 0.3 percent from the prior month, according to the median forecast of 18 economists surveyed by Bloomberg News. Estimates ranged from a decline of 0.8 percent to a gain of 0.2 percent. The gauge was projected to drop 0.7 percent from January 2009, according to the survey median, following a 3.1 percent decrease in the 12 months ended in December. Year-over-year records began in 2001. “While we continue to see improvements in the year-over- year data for all 20 cities, the rebound in housing prices seen last fall is fading,” David Blitzer, chairman of the index committee at S&P, said in a statement. Higher Inventories “Housing starts continue at extremely low levels, recent reports of home sales suggest the market remains difficult, and concerns remain about further foreclosures and a large shadow inventory of unsold homes,” Blitzer said. Compared with the prior month, 12 of the 20 areas covered showed a seasonally adjusted increase. Los Angeles had the biggest gain from December, rising 1.8 percent, followed by San Diego, which posted a 0.9 percent increase. Six of 20 cities showed an improvement in seasonally adjusted prices in January compared with the prior month. Home prices increased in Cleveland and Tampa, Florida, in January after falling the previous month. Home prices in Chicago dropped 0.8 percent after a 0.7 percent decrease. Some recent industry reports have indicated renewed price pressure. Twelve cities, including Boulder, Colorado, and Providence, Rhode Island, are showing extended declines in housing values, reversing signs of a recovery that began last year, according to Seattle-based Zillow.com, a real estate information provider. ‘Double-Dip’ The number of markets in a “double dip” jumped in January from five a month earlier, said Zillow, which defines a double dip as five consecutive price drops after at least five straight monthly increases. The gains must have been preceded by a period where values fell in at least 10 of 12 months. One reason home values are depressed is that foreclosed houses are adding to inventory of unsold homes, which compete with more expensive new housing. Foreclosures may climb to 4.5 million this year from 3.96 million in 2009, according to Irvine, California-based RealtyTrac Inc. The Obama administration last week announced plans to help Americans avoid foreclosure, including subsidies for borrowers who owe more than their home is worth. The plan expands Treasury Department and Federal Housing Administration efforts and uses funds from the $700 billion Troubled Asset Relief Program. Some builders are finding ways to protect earnings. Lennar Corp., the third-biggest U.S. homebuilder by revenue, reported its quarterly loss narrowed after it cut administrative costs and reduced incentives to buyers. Miami-based Lennar also benefited from selling in communities with less competition from foreclosures, said Chief Executive Officer Stuart Miller. “We are extremely well-positioned to navigate the rocky bottom and ultimate recovery that lies ahead,” Miller said on a March 24 conference call with investors. Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.
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