Home prices rise in 17 cities in June; Seattle prices flat

Seattle was one of just four major metropolitan areas in which home prices did not rise in June, according to a closely watched index.

The Standard & Poor's/Case-Shiller 20-city index released Tuesday posted a 1 percent increase in June from May and was up 4.2 percent from a year ago. Seventeen of the 20 cities showed monthly price gains.

In Seattle, however, prices remained flat between May and June, and dropped 1.8 percent from June 2009. The Seattle metropolitan area includes King, Snohomish and Pierce counties.

Just three other metro areas — Las Vegas, Charlotte, N.C., and Tampa, Fla. — saw prices slip year over year.

The price increases nationally were attributed to now-expired tax credits that inspired a burst of homebuying. Experts predicted prices will fall through the rest of the year now that demand has faded.

Home sales have dropped sharply since those incentives expired this spring. Lending standards remain tight, unemployment is stuck near double digits and foreclosures are expected to remain at extraordinary levels.

But, while home sales also have dropped in King County, the median price of single-family homes that sold has risen since the tax credits expired, according to another closely watched measure with data more recent than Case-Shiller.

The median price increased 4.4 percent between June and July, according to the Northwest Multiple Listing Service.

Some observers attribute the increase to the tax credits' expiration. First-time buyers are purchasing fewer entry-level homes, they contend, and higher-priced houses now make up a bigger share of the smaller number of sales.

Nationally, however, BNP Paribas economist Yelena Shulyatyeva expects the Case-Shiller report to show price declines by August. And economists at HIS Global Insights project home prices will fall as much as 8 percent and hit bottom sometime next year.

The inventory of unsold homes on the market has grown. At the current sales pace, it would take more than a year to exhaust the nationwide inventory, compared with a healthy level of about six months.

When unsold homes sit on the market, sellers are forced to lower their asking prices. And homeowners looking to trade up may be forced to back out of purchases because they can't sell their homes.

Pam Geller and her husband have been trying to sell their two-bedroom condominium in Los Angeles so they can buy a house. It remains unsold after more than two months on the market, even after the couple lowered the price to $359,000 from $399,000.

They're close to completing the purchase of their next home. But the deal will collapse unless they find a buyer in two weeks. Geller said she's unwilling to slash the price further.

With home prices likely to fall, Geller wonders if it might be better to wait to buy another home. "What I see is houses still dropping" in value, she said.

Seattle Times business reporter Eric Pryne contributed to this report.