Uplifting quarter in home market

The worst may be over for the U.S. real estate market, a report issued Tuesday suggests. Nationally, prices in the second quarter posted their first quarterly increase in three years, up 2.4 percent, according to the Standard & Poor's/Case-Shiller's U.S. National Home Price Index.

"This is an impressive turnaround," Robert Shiller, creator of the index, said on CNBC.

But he warned that the continuing wave of foreclosures could depress prices again.

The monthly index of 20 major cities also rose 1.4 percent from May to June, with Dallas and Denver clocking their fourth straight increase.

Only Detroit and Las Vegas saw prices fall in June. Las Vegas' index reading fell to 107.31 in June from 109.49 in May. Detroit's fell to 69.49 from 70.05.

Las Vegas has now dipped below the Case-Shiller basis line. But that is a good thing, said Dennis Smith, president of Las Vegas-based Home Builders Research. It means homes are undervalued here.

"That's why we're selling (homes). Affordable housing was always one of the descriptions of Las Vegas before 2002 and 2003. When houses were no longer affordable, that's when the market took a dump," Smith said.

Las Vegas is due to rise in the Case-Shiller index, but Smith wouldn't predict when.

Unemployment, running at 13.1 percent in Las Vegas, is a key factor. Some local economists are predicting it will be 2012 before things turn around, he said.

The Case-Shiller data reflects changes from May to June. But new, local data seem to corroborate the trend.

SalesTraq, another Las Vegas market research firm, reported a 0.7 percent increase in July resale median prices to $124,900 from $124,000 in June. The price has been hovering around $125,000 since May. New home prices edged up $1,000 to $210,000.

Home Builders Research reported Las Vegas, with the nation's highest foreclosure rate, saw a slight increase in median new home prices in July to $206,549, up $1,059 from the previous month. Median resale prices stayed the same at $125,000.

"The sharp free fall in prices is over," said Michelle Meyer, an economist at Barclays Capital Inc. in New York.

Jeff Canarelli, vice president of sales for Las Vegas-based home builder American West, said the Case-Shiller report is "very positive."

Canarelli is seeing more sales to first-time home buyers at subdivisions such as Lexington at Highlands Ranch.

"We've known we're near the bottom," he said. "I think Las Vegas gets an A-plus for affordability. People want a good home as opposed to a foreclosure, as long as it fits in their affordability range."

Smith said he is getting a feel from talking to industry insiders that Las Vegas' housing market has stabilized but will probably bounce up and down from month to month.

One analyst offers a warning. Anyone expecting a rebound in home prices and consumer sales or a sharp V-shaped recovery is in "fantasyland," said Mike Shedlock, investment adviser for SitkaPacific Capital Management.

Nevada has $149 billion in mortgage debt, and 65.6 percent of the properties have negative equity, according to a report from Core Logic First American. Nationwide, there is $10.1 trillion in mortgage debt, 32.2 percent of the properties have negative equity and another 5.4 percent are nearly "underwater."

Steve Hawks of Platinum Real Estate Professionals in Henderson said Case-Shiller is an accurate barometer for home prices nationwide, but the index rose only because of a shortage of bank-owned houses that should be on the market.

"At least it's good news," he said. "People don't mind overbidding, because the payment's not that much different with interest rates so low. Once you go above $250,000, sales get slower."

The Case-Shiller 20-city index tracks repeat sales on the same properties over time, but it closely tracks only 20 cities, not the whole country. The national index tracks more regions, but not every metropolitan area.

The Associated Press, Bloomberg News and McClatchy News Service contributed to this report.