(TheNicheReport) -- The latest S&P Case/Shiller 20-city composite index shows the American housing market posting consecutive price gains over the last four months. According to the widely-respected index, the appreciation in July accounted for 1.6 percent, less than the significant 2.3 percent reported in June. The 20 metropolitan areas in the report posted gains, with Minneapolis leading the way followed by Detroit.
A more positive report was issued by the National Association of Realtors (NAR) last week. That report indicated median sales price increases of 9.5 percent from August 2011. The difference in the reports can be attributed to the data collection model used; the NAR compiles monthly sales while the Case/Shiller lags by two months and looks at the big picture over a three-month period. Still, both reports are positive and point to a stabilization of the housing market.
Sales of Luxury vs. Mid-Priced Homes
The NAR report shows that expensive homes that typically require jumbo mortgages have experienced strong gains in sales and pricing. The Case-Shiller report, however, shows that homes that sell at prices lower than the median values are not being snapped up so fast. The 20 Case-Shiller index includes communities like Atlanta where losses in value were still being felt in the first quarter of 2012, thus making this report a more accurate barometer of the housing market.
Low Foreclosure Activity Signals Caution
Foreclosures filings have tumbled by 15 percent since August 2011. This would normally be considered good news, but once the moratorium on foreclosure proceedings triggered by a nationwide investigation last year is taken into account, a different observation should be made.
RealtyTrac, a national foreclosure analytics firm, is reporting an uptick in foreclosure filings in states like Florida and New York. These filings could gain momentum as the banks run out of mortgages to modify, and thus the distressed property portfolios of major lenders could once again swell up and bring home prices down. Real estate investors and flippers are certainly waiting for this opportunity.
In the end, the home price rally could be interrupted by a wave of foreclosures or by a stagnant recovery in working and middle-class housing markets, but the real appreciation may not be experienced until first-time home buyers are once again able to purchase their first dream house.