Why Home Price Gains Might Even Stick This Time

Well, here’s some good news: On Tuesday the Case-Shiller Index showed that June home prices in 20 U.S. cities were higher than a year ago, the first year-over-year gain since 2010, when a first-time homebuyer tax credit boosted sales. “The better comparison is probably December 2006—the last time prices were in positive territory excluding tax-credit-induced distortions,” Deutsche Bank economists wrote in a note on Tuesday morning.

The question is: Will prices hold or even grow in the fall? Or will they continue the market’s recent trend of what CoreLogic calls a “Sisyphean slide,” by which price decreases in the second half of the year erase any gains. In normal times, home prices often climb in the first half of the year, as families gear up to move and get settled before the school year starts, and then flatten in the later months, when there is less activity. For the past several years, though, prices have fallen in the second half of the year, in part because fewer homeowners were selling and low-priced foreclosures made up a bigger share of the market.