The Standard & Poor’s/Case-Shiller index, which measures movement of home prices in 20 major cities, rose 0.5% in May from April, the first monthly gain since June 2006. Analysts say that the housing market is showing signs of stabilization. “The housing market looks like it has found a floor and we may be on the way to some kind of gradual improvement,” said Ken Mayland, president of ClearView Economics. “After three years of this nasty housing recession, I think we’ve got to be pleased with such an improvement in a relatively short period,” said Harm Bandholz, economist at UniCredit Research.
Analysts feel that unless there is improvement in employment, home prices will not rebound. According to the Federal Reserve, household net worth dropped by $13.9 trillion in the first quarter of this year due to a drop in home prices and stocks. Homebuyers’ confidence has been hit and many have deferred their decision to purchase homes. “We are preparing for this recovery to take a while to pick up steam,” said Frits van Paasschen, chief executive officer of Starwood Hotels & Resorts, the third-largest U.S. lodging company.