U.S. home prices have reached a bottom and may be set to rise in the first half as buyers take advantage of increased affordability, said Karl Case, the economist who co-founded the S&P/Case-Shiller home price index. "Prices have gone flat, bouncing around at what I think is essentially a bottom," Case, a retired professor of economics at Wellesley College, said in a radio interview today on "Bloomberg Surveillance." "We're really going to have to wait to see what the spring market brings."
The S&P/Case-Shiller index of home values in 20 cities fell 1.6 percent in November from a year earlier, the biggest 12- month decrease since December 2009, the group said today in New York. The Federal Housing Finance Agency, which measures sales financed with mortgages backed by Fannie Mae and Freddie Mac, said separately that prices slid 4.3 percent from November 2009.
An abundance of inexpensive homes and an expanding economy will support housing demand as it enters the so-called spring selling season when the bulk of transactions typically occur, said Case, who created the price index with Yale University Economics Professor Robert Shiller. The National Association of Realtors' affordability index, a gauge of median income against home prices, reached an all-time high of 184.5 in November.
Housing 'Bargains' "There are bargains out there," said Case. Affordability will entice first-time buyers to jump into the market "if jobs are created at a pretty good clip," he said.
A real estate boom pushed prices in the 20 cities covered by the Case-Shiller index to a record high in July 2006 after almost doubling in six years. The benchmark tumbled 33 percent from its peak to an April 2009 low that put homes at 2003 prices. It has gained 3.3 percent since then.