Data through May 2009 released Tuesday by Standard & Poor’s show that, although still negative, the annual rate of decline in home prices improved for the fourth consecutive month this year. In fact, on a month-to-month basis, prices gained. The 10-city and 20-city composites of the S&P/Case-Shiller Home Price Indices, declined at an annual rate of 16.8 percent and 17.1 percent, respectively, in May – an improvement over 18.0 percent and 18.1 percent annual declines the month before. From April to May, the 10-city composite increased 0.4 percent and the 20-city composite rose 0.5 percent. After 16 consecutive months of record annual declines, beginning in October 2007 and ending in January 2009, S&P’s indices have now shown four consecutive months of improvement in annual returns. Looking at the monthly data, 13 of the 20 metro areas included in the study reported positive returns, and the 10-city and 20-city composites showed gains for the first time since the summer of 2006. “To put it in perspective,” David M. Blitzer, chairman of the index committee at Standard & Poor’s, said, “this is the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing.” Blitzer says he also sees a “clear inflection point” in the year-over-year data, after the steep decline that began in the fall of 2005.

But he cautions that on an annual basis, home prices are still down an average of 17 percent across all metro areas. “We likely do have a way to go before we see sustained home price appreciation,” Blitzer said. As of May 2009, average home prices across the United States are at similar levels to where they were in the middle of 2003, indicating that the three years of appreciation that occurred from 2003-2006 were all given back in the following three years. From the peak in the second quarter of 2006, the 10-city composite is down 33.3 percent and the 20-city composite has dropped 32.3 percent. In terms of annual declines, the numbers remain relatively somber, with all metro areas and the two composites in negative territory. Sixteen of the 20 metro areas in S&P’s study are still reporting double digit declines on a year-over-year basis. Las Vegas, Los Angeles, Miami, Phoenix, Seattle, and Tampa posted their lowest index levels in May since their respective peaks. From peak to trough Phoenix and Las Vegas are the worst off, down 54.5 percent and 53.4 percent, respectively. More upbeat news is seen in the monthly data. Dallas and Denver have reported three consecutive months of positive returns. Atlanta, Boston, Cleveland, San Francisco, and Washington D.C. each reported two consecutive months of positive returns.