Home prices rise for a second straight month

The Standard & Poor's/Case-Shiller index, which measures the movement of home prices in 20 major U.S. cities, rose 1.4% in June from May, almost three times the 0.5% increase of the month before. The index however dropped 15.4% in June from a year earlier; this is the smallest drop since April 2008 and follows a 17% drop in May 2009. "Home sales are on the way up, building has bottomed, and home prices is the last ditch," said John Herrmann, president of Herrmann Forecasting. "The rate of declines in prices is abating so rapidly that we could bottom out by next year. The recovery is starting."

Foreclosures continue to threaten housing market recovery. Mortgage delinquency and inventory of houses in foreclosure are at record highs. Industry players express cautious optimism about the near-term prospects for the housing market. "As the supply of unsold housing inventory shrinks nationwide, and if consumer confidence continues to improve, we should see stronger demand," said Robert Toll, chief executive officer of Toll Brothers. "It has already positively impacted our pricing power as we are reducing incentives in many markets."