INSTANT VIEW: Home prices rise for fourth straight month

NEW YORK (Reuters) - U.S. home prices in August rose for the fourth straight month, surpassing forecasts and providing the latest sign that the hard-hit housing market is stabilizing after a three-year slump, according a report on Tuesday.

KEY POINTS: * The Standard & Poor's/Case-Shiller composite index of home prices in 20 metropolitan areas rose 1.2 percent in August from July, above the estimate of a 0.7 percent rise found in a Reuters poll. The increase, however, was less than the 1.6 percent seen in July, S&P said. * The composite index of prices in 10 metropolitan areas gained 1.3 percent in August after a 1.7 percent rise the previous month. * The monthly price increases helped the annual rates, with the yearly pace of declines in home prices slowing to a 10.6 percent drop in the 10-city index and a 11.3 percent decrease in the 20-city index.

COMMENTS:

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:

"Home price are showing steady progress. There was a 1.2 percent increase in August, a little bit slower than in July when home prices rose 1.6 percent. Sixteen out of 20 cities had increases in prices and even the worst city was down just one percent (Cleveland). Home prices in San Francisco rose 2.6 percent. San Francisco is having a relatively spectacular rise in prices.

"The picture so far is that prices have bottomed and are beginning to revive on a broad basis which obviously is good news for lenders and household balance sheets. The question is whether it will be sustainable with a lack of employment growth and the potential expiration of the first-time home buyer credit."

DOUG ROBERTS, CHIEF INVESTMENT STRATEGIST, CHANNEL CAPITAL RESEARCH.COM, SHREWSBURY, NEW JERSEY:

"Right now it's an improvement. It's further indicating a stabilization, but it's not anything to write home about, it's still a decrease. There's a bottoming process, but where is the bounce? The bounce seems to be driven by the first-time home credit. That's one of the reasons why we were lower yesterday - part of the reason was nervousness over whether the government would renew or extend it, or whether it would expire. Then again, it did come in slightly better-than-targeted and that is a positive."

GUY LEBAS, FIXED INCOME STRATEGIST, JANNEY MONTGOMERY SCOTT, PHILADELPHIA:

"What we are seeing is that home prices are being supported by federal tax credit which will expire Nov 30th. We are seeing a wave of demand before the expiration of that credit.

"We will see a slowing of the increase. But with unemployment being so high, it's hard to see how this could be sustained. But this remains a positive."

ZACH PANDL, ECONOMIST, NOMURA SECURITIES, NEW YORK

"The gains over the course of the summer have largely been driven by seasonal affects rather than a sharp turn in supply-demand fundamentals in the housing market.

"What we saw this month is that the month-over-month increase decelerated from July to August, which is exactly what we would expect if seasonals are in fact what's going on here. That's a typical seasonal pattern that we saw in house prices throughout the 1990s, for example.

"The key question will be what happens next month, September and October, when you're leaving the peak selling season, what happens to prices then.

"So to us the outlook for house prices is still very uncertain. We still have a massive supply overhang in the market, a steady flow of foreclosures and only a moderate increase in home sales at this point, although we did have pretty good home sales last month. So we're still quite cautious around the house price outlook, despite a few months of gains here."

DAVID SLOAN, ECONOMIST, 4CAST LTD, NEW YORK:

"It does suggest there is some recovery going on in the housing markets. The numbers weren't quite as strong as the previous couple of months but we've got the fourth straight increase. It is possible the market is getting some temporary support from the temporary tax credit which may not last longer. But overall it's an encouraging number."

MICHAEL WOOLFOLK, SENIOR CURRENCY STRATEGIST, BNY MELLON, NEW YORK:

"Nineteen of the 20 metro areas show improvement, so that's good. The report seems to confirm some of the national figures suggesting the housing market appears to be stabilizing. But it's going to be a long haul, and no one expects anything market-moving before year-end. The housing market is shell- shocked and consumers are still having a hard time accessing credit. The marginal improvements we see in housing tend to be related to such things as incentives for first-time homebuyers and repossessions. It's not the type of improvement yet that suggests we're back toward sustainable growth in housing."

CRAIG PECKHAM, EQUITY TRADING STRATEGIST, JEFFERIES & COMPANY, NEW YORK:

"The pace of sequential increases confirms that we're getting firming in pricing, and that it's well-spread across price points. We'll get some question markets about how much of this is from artificial demand related to the tax credit, but that's skewed toward lower price points. Since Case-Shiller is a broader spectrum, this speaks positively to the idea of price increases across the board. It's hard to view this as anything other than a net positive."

MARKET REACTION: STOCKS: U.S. stock index futures rose. BONDS: U.S. Treasury debt prices were little changed. DOLLAR: U.S. dollar fell against the euro.