Professor Karl Guntermann's latest ASU-RSI report confirms Phoenix-area home prices have been slowly increasing for the past five months.

Phoenix-area home prices continue to slowly increase each month, despite the high level of foreclosures in the Valley. A new report from the W. P. Carey School of Business at Arizona State University confirms slight improvements for the past five months in a row.

The Arizona State University-Repeat Sales Index measures changes in average Phoenix-area home prices from year to year. The latest report reveals Valley house prices declined by 25 percent between August 2008 and August 2009. However, that's less than the 28 percent drop from July 2008 to 2009 and the 31 percent drop from June 2008 to June 2009.

"Since the most rapid declines back in February and March, the index has been declining at a slower rate each month," says Professor Karl Guntermann, the Fred E. Taylor Professor of Real Estate at the W. P. Carey School of Business, who wrote the report. "The local housing market is regaining some measure of stability."

Still, Guntermann cautions that investors buying foreclosed homes and first-time homebuyers taking advantage of the federal tax credit are pushing up prices. He says the large number of foreclosures likely to hit the market next year makes it difficult to predict the direction of house prices with any certainty.

Preliminary index estimates show continued good news for now, with a lessening 23-percent drop from September 2008 to September 2009 and a 20-percent decline from October to October. The lower-priced end of the market is still suffering more than the higher end.

The median price for Phoenix-area home sales in August was $126,500. That's up from $125,000 in July and way up over the market low of $117,500 back in April.

The overall index has now declined for a record 30 months in a row. Annual drop rates vary widely across different regions of the Valley, but that spread is starting to get smaller. Prices have dropped by more than 50 percent in Glendale, Peoria and Mesa since their peak in 2006. All other Valley cities, including Scottsdale and Paradise Valley, have experienced declines more than 30 percent.

Unlike in the single-family housing market, Guntermann sees clear signs of more trouble ahead for the townhouse/condo market. The median price of those units in August was $99,000. The preliminary estimate for October is just $90,000.

"After several months of relative stability in townhouse/condo median prices, the October decline is not a good sign," says Guntermann.

The ASU-RSI is based on repeat sales, the most reliable way to estimate price changes in the housing market. Repeat sales compare the prices of a single house against itself at different points in time, instead of comparing different homes with different quality factors.

The ASU-RSI is produced through the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. The current report and archived reports are available at the Division of Real Estate - Repeat Sales Reports. Further ASU-RSI analysis is available at http://knowledge.wpcarey.asu.edu.