Aug 28, 2012 09:51 AM EDT

Home Prices Low, Mortgages Lower, Now Is Best Time To Buy A House

According to it appears as if the housing market may be on the rise as home prices in 20 U.S. cities climbed in June from a year earlier. This is the first gain in two years.

The S&P/Case-Shiller index of property values in 20 cities increased 0.5 percent from June 2011, the first gain since September 2010, a report from the group showed today in New York. The median forecast of 29 economists surveyed by Bloomberg News called for a 0.05 percent drop. Nationally, prices jumped last quarter by the most in more than six years.

With mortgage cost near a record low more unsold houses are being to be purchased.

"The price gains are becoming broader," said Brian Jones, a senior U.S. economist at Societe Generale in New York, who projected values would rise. "This is certainly a positive step," he said, "but we still have a long way to go."

Stock-index futures trimmed earlier losses after the report. The contract on the Standard & Poor's 500 Index maturing in September dropped 0.1 percent to 1,406.7 at 9:23 a.m. in New York after having been down 0.3 percent earlier.

Estimates in the Bloomberg survey ranged from declines of 1.5 percent to a 1 percent gain, according to the survey. The Case-Shiller index is based on a three-month average, which means the June data was influenced by transactions in April and May.

The 20-city index improved after showing a 0.7 percent drop in the year ended May. Year-over-year records began in 2001.

Today's report also included quarterly national figures. Prices covering all the U.S. increased 1.2 percent in the second quarter from the same time in 2011 compared with a 1.4 percent drop in the year ended March. They jumped 6.9 percent from the previous three months before seasonal adjustment. The gauge increased 2.2 percent after taking those changes into account, the best performance since the fourth quarter of 2005.

"We seem to be witnessing exactly what we needed for a sustained recovery," David Blitzer, chairman of the S&P index committee, said in a statement. "The market may have finally turned around."

Atlanta showed the biggest year-over-year drop, with prices falling 12 percent.

Toll Brothers Inc. (TOL), the largest U.S. luxury-home builder, reported a better-than-estimated profit and an increase in revenue for its third quarter ended July 31. The average price of the homes that the Horsham, Pennsylvania-based company delivered in the quarter climbed to $576,000 from $557,000 in the previous three months.

Foreclosures, though abating, are still a risk. Distressed sales accounted for 24 percent of existing-home purchases in July, the Realtors data showed. That's less than the prior month and down from 29 percent in July 2011. Such sales are comprised of foreclosures and short sales, in which the lender agrees to a transaction for less than the balance of the mortgage.

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