Home prices show continued improvement….but

May was the second straight month in which the comparison between last month and the same month last year showed an increase in home prices.  Compared to May 2011, home prices rose 2.6% and with April’s increase, this is the first time there has been consecutive growth in home prices since the home buyer tax credit was put into place in 2010.   However, home prices was not the only metric that increased but also rentals which increased 6% from this time last year.  Metro areas like San Francisco, Miami, Denver and Boston all saw increases above the 6% mark.  It is for this reason that it is cheaper to buy a home than rent one.

Even though these numbers look good on the surface, there are some troubling signs ahead for the housing market.  The first one being the disappointing number of jobs created in May.  People will be more likely to buy a home when they are more confident in their ability to keep a job, once that confidence has waned, then home-buyers will turn to renters.  Also with mortgage companies trying to auto-correct after the housing bubble burst, it is still hard to find home buyers with suitable credit.

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