Data through June 2010, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index rose 4.4% in the second quarter of 2010, after having fallen 2.8% in the first quarter. Nationally, home prices are 3.6% above their year-earlier levels. In June, 17 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were up; and the two composites and 15 MSAs showed year-over-year gains. Housing prices have rebounded from crisis lows, but other recent housing indicators point to more ominous signals as tax incentives have ended and foreclosures continue.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 3.6% improvement in the second quarter of 2010 over the second quarter of 2009. In June, the 10-City and 20-City Composites recorded annual returns of +5.0% and +4.2%, respectively. These two indices are reported at a monthly frequency and, after 16 consecutive months of improvement in their annual rates of return, June’s figures were the first to moderate from their prior month’s pace, pointing to a possible deceleration in home price returns. The 10-City Composite posted a +5.0% annual growth rate in June, versus +5.4% in May, and the 20-City Composite was up 4.2%, versus its +4.6% May print.

The monthly Composites cover June and the national index covers the second quarter, when the government’s program for first time home-buyers was winding down. While the numbers are upbeat, other more recent data on home sales and mortgages point to fewer gains ahead. Even with concerns about near term developments, we recognize that the housing market is in better shape than this time last year. Further, California’s cities have moved from some of the hardest hit to three of the four leading cities based on year-over-year gains. Among the other hard hit cities, the news is also a bit encouraging – Las Vegas, however, remains among the weaker cities.

Seventeen of the 20 MSAs and both Composites saw home prices increase in June over May – Las Vegas was down 0.6%, Phoenix and Seattle were both flat. Through the second quarter, 15 of the 20 MSAs and both Composites have positive annual growth rates, and no market is registering a doubledigit decline. The worry starts when you remember that the Homebuyers’ Tax Credit has expired, foreclosures are still at high levels, and July data on home sales and starts were very, very weak. The inventory of unsold homes and months’ supply data were particularly troubling. If this relative weakness in demand continues, it will likely filter through to home prices in coming months.

As of the second quarter of 2010, average home prices across the United States are at similar levels to what they were in the autumn of 2003. The 2010 second quarter values improved by 4.4% over the first quarter, with a corresponding annual rate of return of +3.6%. Since its recent 2009 Q1 trough, home prices have grown nationally by +6.8%.

From their peak in June/July of 2006 through the trough in April 2009, the 10-City Composite is down 33.5% and the 20-City Composite is down 32.6%. Through June, they have recovered by +7.0% and +6.3%, respectively. The peak-to-date figures through June 2010 are -28.8% and -28.4%, respectively. Both the 10-City and 20-City Composites saw somewhat slower annual growth. The 10-City Composite was up 5.0% in June, versus +5.4% in May, and the 20-City Composite was up 4.2% in June, versus May’s +4.6%. Most cities also experienced smaller price gains; while June itself was positive, the annual growth rates decelerated in 14 of the MSAs.

Looking at the monthly statistics, both the 10-City and 20-City Composite were up 1.0% in June over May. Seventeen of the 20 metro areas showed an increase in June compared to May – Las Vegas was down 0.6%, Phoenix and Seattle were both flat. Sixteen MSAs were positive for all three months of the quarter. Minneapolis, San Diego, San Francisco and Washington have shown recovery from recent lows of +15.9%, +13.4%, +21.1% and +12.0%, respectively. San Diego, in particular, has stood out with 14 consecutive months of increasing home prices. Las Vegas continues to be weak, it was the only market that fell in two months of the second quarter. Home prices in that city are very close to their January 2000 levels.