The market value of U.S. homes in 20 major cities rose by 1.6% in July compared with June, the third monthly increase in a row, according to the Case-Shiller home price index released Tuesday by Standard & Poor's.

In July, prices rose in 18 of 20 cities. Only Seattle and Las Vegas recorded lower prices in July than in June.

In the past year, prices are down 13.3% in the 20 cities. Prices are down 32.6% from the peak, and are now at levels seen in late 2003.

Prices in all 20 cities were lower in July 2009 than in July 2008. Read more from S&P.

The figures are not seasonally adjusted. Prices typically rise in the summer months when demand is stronger.

The figures indicate a "stabilization in national real estate values," said David Blitzer of S&P, who cautioned that the expiration of the first-time home buyer tax credit and increased foreclosures could put more downward pressure on prices.

The Case-Shiller 20-city index tracks repeat sales on the same properties over time, but it closely tracks only 20 cities, not the whole country.

Following are, in descending order, the price changes in each of the 20 cities over the past year, based on the Case-Shiller data for July:

Las Vegas, down 31.4%; Phoenix, down 28.5%; Detroit, down 24.6%; Miami, down 21.2%; Tampa, down 18.4%; San Francisco, down 17.9%; Minneapolis, down 17.3%; Seattle, down 15.3%; Los Angeles, down 14.9%; Chicago, down 14.2%; Portland, down 13.9%; San Diego, down 12.3%; Atlanta, down 11.8%; New York, down 10.3%; Washington, down 9.8%; Charlotte, down 9%; Boston, down 4.9%; Denver, down 2.9%; Dallas, down 1.6%; and Cleveland, down 1.3%.

The market value of U.S. homes rose by a seasonally adjusted 0.3% in July compared with June, the third monthly increase this year, the Federal Housing Finance Agency reported Tuesday.

June's price increase was revised lower to a 0.1% gain, down from 0.5% previously reported. After the revision, July's price level was the same as that initially reported for June. Prices are essentially flat since the beginning of the year.

Prices for the latest month fell 4.2% compared with July 2008 and were down 10.5% from the peak in April 2007, the FHFA's statistics showed. Prices in July were at the same level as March 2005.

Read the full report here.

Mortgage rates held their three-month lows this week, with the 30-year fixed-rate mortgage averaging 5.04%, unchanged from last week, according to Freddie Mac's weekly survey of conforming mortgage rates.

The 30-year fixed-rate mortgage averaged 6.09% a year ago.

The 15-year fixed-rate mortgage averaged 4.46% -- the lowest it has been since Freddie Mac started tracking it in 1991 -- for the week ending Sept. 24, down slightly from its 4.47% average last week. The mortgage averaged 5.77% a year ago.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.51%, unchanged from last week. The ARM averaged 6.02% a year ago.

And the 1-year Treasury-indexed ARM averaged 4.52%, down from 4.58% last week. The ARM averaged 5.03% a year ago.

To obtain the rates, the fixed-rate mortgages and the 1-year ARM required payment of an average 0.6 point, while the 5-year ARM required an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.

"Mortgage rates held relatively steady at three-month lows this week," said Frank Nothaft, Freddie Mac vice president and chief economist, in a news release. "Correspondingly, the Mortgage Bankers Association reported that mortgage applications jumped 12.8% over the week of Sept. 18 to the strongest pace since late May, boosted by refinancing activity."

Area: Montreux

Type: Montreux Custom Home

Price: $1,695,000

Offering arguable the very best views available in Montreux (Nicklaus private community) looking South down the 14th and 15th fairways,surrounded by soaring pines and the Sierra Mountains. If looking for sunny, custom, and single-level living, than this house is it! Loaded w/ custom details and quality construction throughout! There are 3 very large bedrooms suites, a den w/ extensive built-ins, and another study/bonus room that could be the 4th BR. Gourmet kitchen, open to family room w/SubZ, Bosch, Thermador.

• Southern exposure with expansive views of the Sierra Mountains and Montreux’s 14th and 15th fairways
• Open, Single level floor plan designed by award wining architect Gail Ritchie
• Built with the very best of custom quality by Lake Crest Homes
• All the rooms are spacious and oversized with large windows to maximize views
• Bonus room could be 4th bedroom, media room, or second office
• Gourmet kitchen with Subzero fridge, Bosch dishwasher, Thermador double ovens and warming drawer, two kitchen sinks, walk-in pantry and kitchen planning desk
• Bar & wine fridge in great room
• Formal living room and dining room
• Built in audio system and speakers
• Multiple paver patios to take advantage of views and sun exposure
• Water feature
• Adjacent to open space and Montreux green belt, with no neighbors to the North and East
• Hot tub located off Master bathroom
• His and Her master closets
• Three substantial fireplaces – master, living room, and great room
• Two spacious guest suites each with walk in closets, and oversized bathrooms with double sinks
• Three oversized garage spaces with built in cabinetry
• Hardwood and travertine floors
• Montreux golf membership, golf cart and some furniture can be negotiated separately

Passing through the Fort Myers, Fla., airport a few weeks ago, I noticed people eagerly signing up for a free bus tour of foreclosed real estate—with all properties offering water views. During the ride to my hotel, the young driver volunteered that he had just bought his first house, paying $65,000 for a foreclosed property in nearby Cape Coral that last sold for over $250,000. He said he had never expected to be able to buy anything on a driver's salary, let alone something that nice.

Last week, Standard & Poor's reported that its S&P/Case-Shiller U.S. National Home Price index of real-estate values increased this past quarter over the first quarter of 2009, the first quarter-on-quarter increase in three years. Its index of 20 major cities also rose for the three months ended June 30 over the three months ended May 31, with only hard-hit Detroit and Las Vegas experiencing declines. The week before that, the National Association of Realtors reported that sales volume of existing homes was up 7.2% in July from June.

In short, the data suggest that real-estate prices hit a bottom some time during the second quarter, and have now begun to rise. There's no way to be certain that this marks the end of the long, painful correction that followed the real-estate bubble, but clearly prices are no longer in free-fall. That means if you've been sitting on the fence, it's time to act.

Ordinarily I'd never try to time the real-estate market, but I can understand why buyers have been cautious. Few want to buy in down markets, just as stock buyers avoid bear markets. And for most people, of course, buying a house is a much bigger decision than buying a stock. But with real-estate prices nationally now down about 30% from their 2006 peak and showing signs of turning up, the prices aren't likely to go much lower. Every real-estate market is local, and so there may be a few exceptions. Overall, though, I can't imagine a better time to buy than now.

In addition to bargain prices, buyers also should find plenty of homes to choose from. The inventory of unsold homes was 4.09 million units in July, up 7.3% from June, according to the National Association of Realtors. And mortgage rates this week were at a two-month low of close to 5%, according to Zillow. Even the stricter appraisal process is working to the advantage of buyers. Appraisals are coming in far lower than most sellers have been expecting, forcing them to face the new reality of sharply lower prices. And with stricter standards, lenders aren't going to let buyers borrow more than they can afford, which protects buyers and helps to keep prices down.

Unless you're really prepared to accept the demands (and headaches) of being a landlord, I don't recommend direct ownership of real estate as an investment. The days of buyers lining up to flip Miami Beach and Las Vegas condos are mercifully gone.

There are much easier ways to make money in real estate, such as real-estate investment trusts or buying shares in home builders and other housing-related businesses (such as Home Depot). Historically, the mean rate of return on real estate has been around 3%, according to research from Yale economist Robert Shiller, who co-developed the Case-Shiller index. Shares in REITs and other stocks have often done much better.

But there's a good reason homeownership has been such a central part of the American dream. It delivers security, pride of ownership, a sense of community and decent investment returns as a bonus. I felt glad for my driver in Florida. He represents the other side of the foreclosure crisis. For every hardship story, and no doubt there are many, others are realizing their dreams of home ownership and getting what may well turn out to be the deals of their lives.

Article published on 9/2/09 by James B. Stewart, for the Wall Street Journal
Click here to read the original article.

SUPPLY (ON MARKET): Continues to hold very steady in the current range with little meaningful deviation (7th month). This implies that as the market resolves supply, it is being replaced with about the same level of new activity.

DEMAND (SOLD PER MONTH): Demand is up a solid 120 units from August for SFR and 17 units for Condo. The increase for SFR is somewhat more than expected.

FAILURES (EXPIRE-WITHDRAW): The rate of failure for SFR jumped significantly in concert with demand. Condo rate down marginally.

IN ESCROW (FUTURE CLOSINGS): SFR in escrow inventory moved up by 33 units even though closing activity increased from the previous month. Based on this increase of properties in escrow, expect the SFR closings to continue to increase while Condo will remain close to the current closing level.

PERCENT SELLING: Due to the inordinate increase in failures for SFR, Percent Selling declined 5 points while Condo rose 7 points.

MONTHS SUPPLY: Market continues to tighten for both types and is still relatively elevated. Without meaningful changes or shifts in Months Supply, current price trends will remain on current trajectories (slightly negative per month).

MARKET SPEED: Market Speed moved up for both types. The pace of the Reno market has resumed overall positive movement. The best performing Reno real estate submarket remains Fernley, returning a Market Speed of 50 (up 6 points from last month). The slowest is Yerington at a very sluggish 6. As a generalization, the Reno real estate area moves at a slower and less volatile pace than other market surveyed such as Las Vegas or Phoenix. This is due to a lower percentage of transactions closing REO (about 40% in Reno versus 70% in Las Vegas-Phoenix).

PRICES: Price indicators are erratic but signs of stabilization for SFR are apparent. Condo still demonstrating a weaker price schedule. Expect this up and down trend to continue. Large changes in price should not be expected, while relatively small diminishing negative shifts are more likely. This trend is generally in line with other markets surveyed.

MONTREUX REAL ESTATE: We have seen continued strength in the Montreux real estate market. We have had a lot of activity at the Welcome Center, and real estate buyers have been submitting offers.