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By Jason Stipp and Robert Johnson, CFA | 04-27-2012 10:00 AM

Housing Market Taps on the Door to Recovery

Home price, new home, and pending home sales data this week show strong signs we're turning a corner.

Jason Stipp: I'm Jason Stipp for Morningstar.

Despite some headlines you may have read this week, there was some positive news on the housing market. Here with me to explain the situation is Morningstar's Bob Johnson, our director of economic analysis. Thanks for joining me, Bob.

Bob Johnson: Great to be here.

Stipp: So, there are a few different key pieces of data that we got recently on housing.

Let's talk about the first one, prices. We got some housing price data this month. Case-Shiller, obviously, one of the bigger ones that came out. What did that report say?

Johnson: Well, you know what, it was a double-edged report. The front end of it said we were down eight-tenths of a percent in the 20 City Index, but that's not seasonally adjusted. When you go back and seasonally adjust it, we were up a couple of tenths. So, actually a positive piece of news that we actually did get the growth in prices that I was hoping to see. And even if you look back on the year-over-year prices, we've definitely moderated the trend on a year-over-year [basis], and we're down to something like the 3% level.

Stipp: So that headline that said we've hit a new housing low was a number that wasn't seasonally adjusted?

Johnson: Correct.  Absolutely. That's how they wrote the article, and how they wrote the press release, but if you dug behind the data, got the seasonally adjusted data and looked year-over-year, there has definitely been some improvement, and on the month-to-month, we actually had one of our first price increases.

Stipp: We got another report from the FHFA, and that also gives you some insight on the housing prices. What did that report say, and were there any differences with what you saw in Case-Shiller?

Johnson: Well, it showed not only that month-to-month there was a price increase, but they also showed that there was a year-over-year price increase. That's the first time that's happened since July of 2006, so it's dramatic that we've shifted in the positive territory on that metric. ... We're talking a large number of years, and now we've finally seen a year-over-year increase, so that was really probably the most compelling piece of price data, and it was up monthly in five of nine months on a year-over-year basis; it was up in six out of nine markets. So, it was not concentrated in North Dakota or something like that, lest anybody question.

Stipp: So I wanted to ask you a follow-up, because we all do know that different regions have different experiences. They've had different recovery rates. What are some of the regional takeaways when you look at the data on pricing? Are some markets still really struggling, and others are starting to pick up a little bit better?

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