Case-Shiller home-price index inches higher, but some experts skeptical

LOS ANGELES — A national index of home prices rose unexpectedly in January, but some experts warned that the struggling housing market could be headed for another dip.

The closely watched Standard & Poor's/Case-Shiller index of 20 metropolitan areas rose 0.3 percent from December on a seasonally adjusted basis. That marked eight consecutive months of home values improving or at least holding steady.

The index was down 0.7 percent from the same month last year, the nearest that the year-over-year reading has come to positive territory in three years.

Seattle is one of the 20 cities in the Case-Shiller index, but it saw January home prices fall 0.6 percent from December and 6 percent from January 2009. The Seattle market peaked in summer 2007 and has dropped 29 percent since then. Local prices have returned to May 2005 levels.

Expectations about housing's direction across the country remain mixed as government initiatives to help home sales and stabilize values begin to expire.

Concern over a potential new wave of foreclosures also remains high despite new efforts by the Obama administration to keep struggling borrowers in their homes.

"Going forward, forces that will bring home prices back down are mounting," said Patrick Newport, an economist for IHS Global Insight. "Our view is that despite this report, prices have further to fall — about another 5 percent."

The Case-Shiller index, which covers three months of data, was influenced by a sales surge in November when buyers rushed to beat the deadline for a federal tax credit for first-time purchases.

Sales fell in December and January, even though that program was expanded and extended through April.

Although many economists expect the extended credit to give sales a further boost, they also predict another fall once the government incentive ends.

"It is way too early for this market to have rebounded the way it has," said Christopher Thornberg, principal of Beacon Economics.

A breakdown of the index showed mixed results with 12 cities posting increases and the rest — including Seattle — decreases.

Economists surveyed by Bloomberg had expected the index to fall in January.

David M. Blitzer, chairman of S&P's index committee, said he was concerned with the slow construction of new homes, falling sales volumes and a potential wave of new foreclosures hitting the market this year.

"We can't say we're out of the woods yet," Blitzer said.

But others saw the 20-city index's improvements as a sign the economic recovery was beginning to help consumers gain confidence.

"What people are seeing in the stock market, and what people are feeling, is the beginning of a real recovery," said Karl E. Case, a professor at Wellesley College and co-creator of the index.

"Now that the economy is starting to come back, I think the psychology has changed," Case said.

Seattle data was reported by Seattle Times business staff.