The Case-Shiller home price index  for major housing markets increased more than 1 percent in July from June, the third consecutive small improvement. Unfortunately the data is two months old. Other, more recent, housing market measures suggest that prices have continued to rise through September, although the pace of gain may have slowed. The cumulative rise in home prices through September is probably about 2 percent. This leaves home prices still about 30 percent below the previous peak level. Nonetheless, the change in trend is significant.
Financially able prospective home buyers as well as speculators have been waiting several years for a clear sign that the price bottom has been passed. Now they have it, at least in most housing markets. There is no sign of the price bottom yet in the most troubled housing markets in the Southwest and Florida. Home prices remain too high in these regions relative to income and rates for available rental housing. Since these regions also have too many homes relative to their now lower population, the slide in home prices will continue for many months. But elsewhere those who have been waiting can now buy without fear that they are leaving money on the table.
The result of the turn in housing prices will be rising home sales later this year. Home sales are reported when the final paperwork transferring the deed is completed. Typically, this is two or more months after the buyers offer was accepted. Reed Construction Data  projects existing home sales to increase 7 percent and new home sales 11 percent by the end of winter with the growth rate accelerating beyond winter.
Depressed home prices will continue to constrain home sales for several more years. More than a third of mortgaged homeowners will still be “underwater,” having home priced less than mortgage principal at the beginning of 2010. A few of these homeowners will default but most will simply wait for their rising home value top catch up with their falling mortgage principal before they are ready to move.
Home-Price Recovery Strengthens (Last month's report)
Which Home-Price Index Is Right?
FHFA Home-Price Index Slightly Increases