Home prices across the country showed improvement in the second quarter and prices in metro areas moved up for the third month in a row in June, according to data released today in the S&P/Case-Shiller Home Price Indices. The U.S. National Home Price Index, based on all nine U.S. census divisions, saw an improvement of 3.6% in the second quarter, after having fallen 4.1% in the first quarter of the year. On an annual basis, prices still remain lower by 5.9%.

In metro statistical areas (MSAs), 19 of the 20 in the 20-city composite index were up in June compared to May, with Portland, Ore., remaining flat. On an annual basis, however, all were down. Both the 10- and 20-city composites improved for the month, each gaining 1.1%. Compared to the year before, the 10-city dropped 3.8% and the 20-city was down by 4.5%.

Unfortunately, much of the improvement is due to seasonal factors rather than real strengthening. Once the data is seasonally adjusted, 11 MSAs reported declines, the 10-city composite remained flat, the 20-city composite declined by 0.1%, and the national index’s gain shrank to only 0.1% from the first quarter.

"A seasonal kick accounts for the recent strength in the indexes," wrote Patrick Newport, U.S. economist at IHS Global Insight, in an email to Builder this morning. "This kick will wear off in the fall, when demand weakens and sellers have to give way on price, and prices will start dropping again."

Newport predicts that prices still have another 5% to 10% to fall, due to foreclosures, excess supply, and poor demand. "Should the economy slip into a recession (a 40% probability in our view), the unemployment rate will climb, driving foreclosures up, leading to an even larger drop in home prices."

Still, the variance in trends among regions showed some significance. "Looking across the cities, eight bottomed in 2009 and have remained above their lows," said David Blitzer, chairman of S&P’s Index Committee, in a statement today. "These include all the California cities plus Dallas, Denver, and Washington, D.C., all relatively strong markets. At the other extreme, those which set new lows in 2011 include the four Sunbelt cities—Las Vegas, Miami, Phoenix, and Tampa, Fla.—as well as the weakest of all, Detroit. These shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together."

Claire Easley is a senior editor at Builder.

Learn more about markets featured in this article: Detroit, MI, Greenville, SC.