by Dawn Gilbertson The Arizona Republic Jun. 17, 2010 12:00 AM
An index of Phoenix-area home prices rose for the second consecutive month in May, the latest sign that home prices are stabilizing.
The Arizona State University-Repeat Sales Index rose 2.7 percent from a year earlier. That reverses a decline of the same magnitude in March. The index posted its first gain in about three years in April, rising 1 percent. Both April and May figures are preliminary and subject to revision.
ASU real-estate professor Karl Guntermann expects the year-over-year price gains to continue through the summer but not much beyond that because the economy is still weak.
“Unless there’s a dramatic change in the market in terms of the local economy improving or foreclosures suddenly slowing down dramatically - neither of which seem likely - it’s most likely that house prices will more or less flatten out for the rest of the year,” he said.
On the foreclosure front, the average price on foreclosure homes went up 3 percent in May from a year earlier, not as strong as the 5.3 percent increase in April. March was the first month foreclosure prices increased year over year since the downturn began.
“It’s probably saying the same thing: Prices are going to go up, but then they’ll just fluctuate,” Guntermann said.
Sales of foreclosure homes are dominating the market and price trends. Prices of non-foreclosure homes, as measured by the index, are still posting double-digit declines.