Amidst sinking home sales and starts, the housing and Realtor industries got some good news, when the Standard & Poor’s/Case-Shiller Home Price Indices, which measure prices of existing homes, reported a 4.4% increase nationally for the second quarter of the year and 3.6% for the year so far.

More encouraging, the Indices’ 10- and 20-city composites each showed gains in June and the second quarter. However, the Indices' authors warn of “ominous signals” relating to the continuing rise of foreclosures and the elimination this spring of the federal home buyer tax credit, which reversed a temporary blip in demand.

The 20-city composite, at 147.97, rose in June by 4.2% over June 2009, as prices in 17 of the 20 markets tracked by the Index increased. (Las Vegas prices were off 0.6%, while prices in Phoenix and Seattle were flat in June.)

The authors note that existing-home prices in the second quarter of this year were at about the same levels they were in the fall of 2003. However, the 20-city Index was still off 28.4% from peak levels in the summer of 2006.

The national Index stood at 138.03 in June. The 10-city Index that month was 161.04, up 5.0%. The biggest gainers over the same month a year ago included San Francisco, which was up 14.3%; San Diego, up 11.2%; and Minneapolis, up 10.7%.

Conversely, cities with the least year-over-year price growth were Detroit and Cleveland, each at 0.8%.

Generally, most cities tracked showed more modest gains in June over May. The 10- and 20-city Indices inched forward 1.0%. Chicago, Detroit, and Minneapolis led the way, each increasing over May by 2.5%.

During a teleconference, S&P’s managing director Dr. David Blitzer noted that since the year 2000, markets that enjoyed big price run-ups in the early part of the decade—such as Miami and Los Angeles, whose price increases exceeded 160%—have since lost 50% to 60% of their value. However, California in particular has staged something of a comeback lately.

Professor Robert Shiller of Yale University, and one of the Indices' authors, expressed some puzzlement, though, about current price patterns. While he concedes the tax credits temporarily stimulated prices and sales, he also noticed that second- and third-tier homes—i.e., more expensive houses, whose buyers probably weren’t able to take advantage of the credit—showed the same intermittent recovery.

Shiller showed a chart, from the website, which projected prices nationally and for three markets—New York, San Francisco, and Miami—through January 2015. “The market prices don’t show a continuing updraft in prices, which are essentially flat,” he noted.

The Indices' co-author, Professor Karl Case of Wellesley College, said that while housing prices have gotten “a lot cheaper” during the recession, he’s troubled by some unexplainable anomalies. Right now, he points out, there’s very little new-home construction. Yet vacancy rates of rental and for-sale homes remain at record or near-record levels, “and they don’t seem to be budging.” Case also speculates that when the 2010 Census numbers are published, they will show that there are fewer immigrants in the U.S. than most people thought, and that immigrant-driven household formation projections would by lower as a result.

Case notes that the Indices survey home buyers in selected cities on a regular basis, and what it’s been hearing since 2007 is that buyers expect home prices to continue to fall, particularly those polled in the last two years.

John Caulfield is a senior editor for BUILDER magazine.