Spring Buying Boosts Home Prices in Chicago

     Last month, home prices in big metro areas sunk to their lowest since 2002. Since the bubble burst in 2006, prices have fallen more than they did during the Great Depression.

     Home prices in major U.S. cities have risen for the first time in eight months, boosted by an annual flurry of spring buyers.

     Six metro areas are at their lowest levels in the nearly four years. Those markets are: Charlotte, Chicago, Detroit, Las Vegas, Miami and Tampa.

     The index, which covers metro areas that include about 50 percent of U.S. households, rose 0.7 percent, the first increase since July. The index measures sales of select homes in those cities compared with prices in January 2000 and provides a three-month average price. The April data is the latest available.

David M. Blitzer, chairman of Standard & Poor's index committee, cautioned that while the price index increase was a "welcome shift from recent months," much of the improvement was likely because of the beginning of the traditionally busy spring and summer home-buying seasons.

A delay in processing foreclosures is also a factor. Homes in foreclosure sell at a 20 percent discount on average, which can hurt prices in neighborhoods. But many foreclosures have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out over the past two years.

     Even with the increase, housing remains the weakest part of the U.S. economy.

     Sales of previously occupied homes sank in May to a seasonally adjusted annual rate of 4.81 million. That's far below the roughly 6 million sold in healthy housing markets. Since the housing boom went bust in 2006, sales have fallen in four of the past five years.

     New-home sales haven't fared any better. They fell in May to a seasonally adjusted annual rate of 319,000 — fewer than half the 700,000 that economists say must be sold to sustain a healthy housing market. Sales of new homes have fallen 18 percent in the two years since the recession ended. Last year was the worst for new-home sales on records dating back half a century.

     Larger down payment requirements, tougher lending standards and high unemployment are preventing people from buying homes. Many people who can afford to buy are holding off, worried that prices have yet to bottom out.

The depressed housing market has weighed on the broader economy. Declining home prices have kept people from selling their houses and moving to find jobs in growing areas. They have also made people feel less wealthy. That has reduced consumer spending, which drives about 70 percent of economic activity.