The recent rises in house prices are nothing more than the normal seasonal uplift triggered by the better weather and the end of the school year. After stripping out such seasonal effects, prices on both the Case-Shiller and CoreLogic indices are still falling. (See Chart below.) That said, the decline in the share of home sales accounted for by distressed sales has meant that seasonally adjusted prices have started to fall at a slower rate. We think prices will continue to edge lower. But even if a floor is soon found, with demand still constrained by the high unemployment rate and the difficulties of securing a loan, house prices are unlikely to rise consistently for a couple of years yet.
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