U.S. home prices rise 0.3 percent in July

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Published: September 22,2009

WASHINGTON — U.S. home prices rose slightly in July from a month earlier,
according to a government index, further evidence the housing market is
stabilizing.

The Federal Housing Finance Agency said Tuesday
prices rose 0.3 percent in July from the prior month, but June’s price
increase was revised down to 0.1 percent from 0.5 percent.

The
index is still 4.2 percent below last year’s levels and 10.5 percent
off its peak from April 2007. It is based on loans owned or guaranteed
by mortgage finance companies Fannie Mae and Freddie Mac.

The
index has declined less than other housing market measurements because
it excludes the most expensive homes and some of the subprime loans
that have fallen into foreclosure.

The report “supports other
evidence that the three-year long decline in prices has come to halt,”
Paul Dales, U.S. economist with Capital Economics, wrote in a note to
clients. But he cautioned that “rising foreclosures and the fragile
economic environment suggest that further gains in prices will be
modest and patchy.”

A tax credit of up to $8,000 for first-time
homebuyers expires Nov. 30, and lawmakers have yet to decide whether to
extend it. While the Federal Reserve has been able to keep mortgage
rates near historic lows, it’s unclear how long that will last.

Another
measurement of home prices, the widely watched Standard &
Poor’s/Case-Shiller national index, posted its first quarterly increase
in three years during the April-June quarter. That fed hopes that the
long-awaited bottom has arrived.

Other economists, however, warn that prices could start falling again next year.

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