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Tuesday, July 07, 2009

ECRI's Leading Home Price Index Up Year-over-year

LOS ALTOS, CALIFORNIA -- ECRI's gauge of future U.S. home prices rose and turned positive in May, the Economic Cycle Research Institute research group said on Monday. This upturn raises hopes that the end of the housing downturn is in sight.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Monthly Leading Home Price Index (LHPI) rose to 116.6 in May 2009 up from 115.0 in April 2009.
On a year-over-year basis, ECRI's LHPI was up 0.7% from 115.8 in May 2008.

Shaded areas represent cyclical downturns in real home prices.

In the article "Recession will end this summer" ECRI's managing director Lakshman Achuthan said
"We'll definitely see the end of this recession this summer. As unique and unprecedented as this recession has been, the transition to recovery is showing up in a textbook way in the leading indicator charts."
Achuthan said the recovery is also showing up in the longer, shorter and coincident indexes maintained by ECRI - plenty of evidence that it has a life of its own.
"When you have a pervasive move in the leading index as we have now, it suggests a more virtuous cycle that feeds on itself has begun."
Specific to housing prices, Achuthan said:
"Another kind of game changer relates to home prices, where if we have a stabilization in home prices - and there's evidence that is happening - then the toxic assets that have been at the heart of the crisis start to get neutralized. The reason that's important is if home prices stop falling, these essentially 'zombie' banks start to come back to life."
More ECRI Articles:
Discuss the data with Lakshman Achuthan, managing director at ECRI, in our facebook forum "ECRI - Economic Cycle Research Institute." If you are not already a member, then you may need to request invitation to "Investing for the Long Term" on Facebook.

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