INSTANT VIEW: Home prices up for first time in three years

NEW YORK (Reuters) - U.S. single-family home prices rose in May from April, the first monthly increase in nearly three years, suggesting prices may be stabilizing, according to Standard & Poor's/Case Shiller home price indexes on Tuesday.

KEY POINTS: * U.S. single-family home prices rose in May from April, the first monthly increase in nearly three years, suggesting prices may be stabilizing, according to Standard & Poor's/Case Shiller home price indexes on Tuesday. * The index of 20 metropolitan areas rose 0.5 percent in April from March, after a 0.6 percent decline the month before, in contrast with the 0.5 percent drop forecast by economists in a Reuters poll. * The May rise resulted in a 17.1 percent annual downturn, but this was the fourth straight month that the rate of decline slowed. This follows a 16-month string of record annual declines starting in October 2007 and ending in January. * S&P said its index of 10 metropolitan areas declined 0.4 percent in May after a 0.7 percent drop in April, for an 16.8 percent year-over-year drop. * In May, 17 of the 20 metro areas showed improved annual prices compared with April. The 10 and 20-city indexes reported positive returns for the first time since summer of 2006. * "To put it in perspective, this is the first time we have seen broad increases in home prices in 34 months," David M. Blitzer, chairman of the index committee at S&P, said in a statement.

COMMENTS:

FRANK LESH, FUTURES ANALYST AND BROKER, FUTUREPATH TRADING LLC, CHICAGO:

"It doesn't seem to be doing much for the market right now. There wasn't a very big change here, not enough to get your attention month-to-month, and the year-on-year number still doesn't look that good. It's better, but I guess I'm not impressed with down-17 (percent) instead of 18."

ALAN RUSKIN, CHIEF INTERNATIONAL STRATEGIST, RBS SECURITIES, GREENWICH, CONNECTICUT

"A very strong signal from the Case Shiller data that home prices are finally starting to stabilize. The increase in the overall index and the breadth of improvement across the country all speak to a stabilization of the housing sector.

"Numerous commentators have long said that when home prices stabilize, it will signal a capacity to better value complex assets as well as signal the potential for wider asset market stability and the stabilization of the financial system in general. This is important news to support equities and make life a little more difficult for absorbing Treasury supply."

PETER JANKOVSKIS, CO-CHIEF INVESTMENT OFFICER, OAKBROOK INVESTMENTS LLC, LISLE, ILLINOIS:

"It looks encouraging. Finally we're getting actually a slight increase, so it's possible that's evidence that prices have leveled out. I would think with this particular data, with it being old, that would almost be a sign that you want to jump in because the market is turning on that.

"Lately the market, to my eye, has kind of a delayed reaction to things. They are kind of waiting always on some other piece of news out there and then you get two or three reports, almost a cumulative effect, pumping things up. It may be the case while this is encouraging, the market is looking for some additional, confirming evidence."

SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR & ASSOCIATES IN TORONTO

"I think there are signs that the housing market is bottoming and this data doesn't change my view. I think the market will be in a consolidation period today. It's more focused on earnings, and I think the housing number is more or less in the market already. People feel things aren't deteriorating as much as before, but they're not getting better either."

GARY THAYER, SENIOR ECONOMIST, WELLS FARGO ADVISORS, ST. LOUIS, MISSOURI:

"It's a good sign. With the numbers we've seen on home sales starting to firm and now home prices stabilizing, we're getting more evidence that the housing market may have hit bottom. And the price improvement, although it's not been going on long, seems to be pretty widespread. Most of the 20 geographical regions showed price increases. Going forward, this could help consumers feel a little better about the economy and could help lending stabilize."

TOM PORCELLI, SENIOR ECONOMIST, RBC CAPITAL MARKETS, NEW YORK:

"The market is going to react more to sales than prices. This is a relatively young set of data. This set of data is consistent with the data we've been seeing. The inventory situation seems to be improving, but supply will be sufficiently high to keep pressure on prices. It's largely consistent with the bottoming process in the housing sector."

RICK KLINGMAN, MANAGING DIRECTOR OF TREASURY TRADING, BNP PARIBAS, NEW YORK:

"We've sold off a little bit, the number is slightly better than expected. It's good news seeing the monthly number going up for the first time in quite some time, but this is what anecdotally people were expecting over the past few months. It wasn't a shock to the market."

MARKET REACTION: STOCKS: U.S. stock index futures trimmed losses. BONDS: U.S. Treasury debt prices added to gains. DOLLAR: U.S. dollar was flat.