US home prices were up 0.8% but government tax credits bolstered the housing market and incentives have expired.
Home prices in April rose for the first time in seven months as government tax credits bolstered the housing market. But the rebound may be short-lived now that the incentives have expired.
Eighteen of 20 cities showed price increases in April from March. Washington, San Francisco and Dallas each posted gains of 2 percent or more. Eleven cities reversed their declines from the month before.
Nationally, prices have risen 3.8 percent from their April 2009 bottom. But they remain 30 percent below their July 2006 peak.
The overall price gains highlight the impact of the federal tax credits for homebuyers at the start of the traditionally strong spring selling season. Buyers rushed to purchase before the tax credits expired at the end of April. The numbers are likely to drop in the next report.
"Demand for homes has softened since then, and that is likely to weigh on prices, particularly in May and June," wrote TD Bank Financial Group economist Martin Schwerdtfeger Tuesday. "Weaker sales and still-high foreclosures will likely drive month's supply higher in the near term, and this will put lid on home prices."
David M. Blitzer, the S&P's index chairman, said the recovery is not getting a consistent and sustained boost from the housing market. He doesn't expect that to happen until next year.
"Other housing data confirm the large impact, and likely near-future pullback, of the federal program," Blitzer said.
Last week, the government reported that new home sales fell in May to their lowest level on record, plunging 33 percent from the month before. That was the slowest sales pace on records dating back to 1963. Sales of previously occupied homes edged down 2.2 percent.
Patrick Newport, an economist at IHS Global Insight, expects prices to resume falling through next year and lose another 6 percent to 8 percent. The declines will be widespread, he predicts.
"In two to three months, the indexes for almost all the cities will begin falling again," Newport said.