Instant View: Home prices up in May

NEW YORK (Reuters) - Single-family home prices rose more than expected in May, still reflecting robust spring sales spurred by homebuyer tax credits, Standard & Poor's/Case Shiller home price indexes showed on Tuesday.

KEY POINTS: * The 20-city composite price index rose 0.5 percent on a seasonally adjusted basis in May after an upwardly revised 0.6 percent gain in April, topping the 0.2 percent rise forecast in a Reuters poll. * This was the second straight monthly rise after declines in the prior two months. * On an unadjusted basis, prices jumped 1.3 percent in May, following April's 0.9 percent gain, which was revised up from an 0.8 percent rise. This was the second straight monthly gain after declines in the six previous months.

COMMENTS:

CHRISTOPHER LOW, CHIEF ECONOMIST, FTN FINANCIAL, NEW YORK

"Prices have stabilized. It will be a long time before they recover back to where they were before. There is still a huge amount of supply on the market but sales appear to have improved enough to stabilize prices."

PETER CARDILLO, CHIEF MARKET ECONOMIST, AVALON PARTNERS, NEW YORK:

"This is obviously another good news for the housing market. With the S&P 500 closing above the 200-day moving average yesterday, we are entering a new phase of a bull market and this is certainly adding to the bullish sentiment. I believe that in August we will get more data like this that shows stability and growth."

SHAUN OSBORNE, SENIOR CURRENCY STRATEGIST, TD SECURITIES, TORONTO:

"U.S. house price data is still very volatile, and I don't think this data alters the bigger picture, which is showing pretty evident softness. It will take a long time before we can be sure there's any lasting strength in the housing sector. It's difficult to pay too much attention to one month's numbers.

"Not really a whole lot has changed. Everyone seems to love the euro now. They've gone from thinking the euro zone was going to fall apart to assuming things are safe and sound. It's partly a reflection of the market being heavily oversold in June and we are seeing the last vestiges of a technical correction here. We may squeeze up to $1.31-$1.32. But people are not entirely confident the euro can continue to rally."

WILLIAM LARKIN, PORTFOLIO MANAGER, CABOT MONEY MANAGEMENT, SALEM, MASSACHUSETTS:

"I think it is a classic sign that we are probably at a bottom in the housing market.

"I am interested to see what the impact of 4.5 percent mortgage rates over the last month will be. It will probably have a big positive impact."

"I would think we will have a positive trend as long as those mortgage rates stay low, which is a pretty strong tailwind for the housing market."

ZACH PANDL, U.S. ECONOMIST, NOMURA SECURITIES, NEW YORK:

"In our view, the house price reports still reflect the impact of the homebuyer tax credit. So we think it's going to take a few more months before we get a good sense of where house prices are headed. In general the house price reports are giving the same signal that other market data has indicated: That we've hit bottom, but we've yet to begin a strong recovery.

"The Case-Shiller is showing a little bit stronger house price trends for May than other housing indicators. It's difficult to interpret because we have both the normal seasonal upswing in housing prices and the homebuyer credit.

"This is not going to change anybody's opinion. We have Treasury auctions this week -- we have just a very full calendar this week culminating in payrolls on the sixth of August."

GARY SHILLING, PRESIDENT, A. GARY SHILLING & CO. INVESTMENT RESEARCH FIRM, SPRINGFIELD, NEW JERSEY:

"It did show an increase, in both 10 city and 20 city, but that was getting to the tail end of the rebate. I don't think its completely surprising. The question is now, where do we go from here? Foreclosures are picking up because so many people are underwater. That doesn't bode well for prices in the future.

"I don't make much of yesterday's home sales data either. We could be at a bottom, and we're certainly at a very low level, but inventory are going to depress prices for a while."

MARKET REACTION: STOCKS: U.S. stock index futures added to gains BONDS: U.S. Treasury debt prices slipped modestly DOLLAR: U.S. dollar rose against the yen