The April S&P/Case Shiller Home Price Index of 20 cities rose 3.8%, a touch above expectations of a gain of 3.4%. The gain in the non seasonally adjusted index was the first since Sept as it captures the last month of the home buying tax credit. Adjusted for seasonals, the m/o/m gain follows a drop in Feb and Mar. Of the 20 cities surveyed, 11 saw y/o/y gains led by San Francisco and San Diego. Las Vegas again led the declines followed by Detroit. Phoenix, a well know busted market, saw a y/o/y gain of 5.4% while Miami fell by .5%. Bottom line, with the housing industry now left to its own natural supply/demand dynamic, the real test comes and while we look to the homebuilding stocks and other material suppliers and home retailers to gauge market reaction, don’t ignore US banks who have mostly assumed no double dip in housing and thus a hoped for stabilization is reflected in the pricing of mortgage related securities on their books.
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