Seattle home prices slip in July from June, bucking U.S. trend

The Case-Shiller national home-price index continued to recover in July, but Seattle missed the party.

Seattle was one of only three metropolitan areas in the 20-city index to show a seasonally adjusted decline from June to July. The Seattle index slipped 0.26 percent in July; the month's other losers, Detroit and Las Vegas, saw home prices fall 0.39 and 1.85 percent, respectively.

The composite index for all 20 cities, adjusted to reflect seasonal variations, rose 1.15 percent in July to 143.05, its second increase in a row after bottoming in May, and a further sign that the recession in home prices may be over.

From July 2008 to July 2009, the Seattle home-price index fell a seasonally adjusted 15.4 percent, ranking the area 13th among the 20 in the Case-Shiller study. Nationally, prices were down 13.3 percent.

"We expected another gain but this is remarkable," wrote Ian Shepherdson, chief U.S. Economist for High-Frequency Economics. He noted the index has risen at an 8 percent annualized rate in the three months to July, the best performance since early 2006 and the first increase on this basis since mid-2006.

However, the index is down about 33 percent from the peak in mid-2006. Home prices are now at levels not seen since the third quarter of 2003.

Prices in Las Vegas, one of the most speculative markets during the boom, are down more almost 55 percent from their peak. In August, almost 80 percent of home resales in Nevada were either a foreclosure or a sale below the value of the mortgage, according to a survey by the National Association of Realtors.

The Detroit housing market is reeling from layoffs in the automotive industry. Seattle, by contrast, was one of the last areas to enter the downturn so prices there have yet to hit bottom.

There are still several risks to the national recovery, including rising unemployment and foreclosures and the expiration of a tax credit for first-time homebuyers. First-time homeowners can qualify for a tax credit worth 10 percent of the purchase price, up to $8,000, but it expires at the end of November. More than a dozen bills to extend the credit have been introduced in Congress, but it's unclear if lawmakers want to continue subsidizing the real estate market.

Still, there are clear positive trends: 13 metro area posted at least three straight months of price gains. The biggest gains in July were in Minneapolis, San Francisco and Chicago.

The Case-Shiller indexes measure home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices increased 50 percent since the beginning of the index.

Seattle Times business reporter Drew DeSilver and The Associated Press contributed to this report.

Drew DeSilver can be reached at ddesilver@seattletimes.com