House prices edge higher in June

NEW YORK (Reuters) - House prices edged higher in June in another sign the market is clawing back some ground from its worst downturn in decades, according to an early reading of single-family home sales during the month.

Home prices rose 1.1 percent on a national level in June from May, though they dropped 11.5 percent over the past year, an index published by Integrated Asset Services said on Tuesday.

The IAS360 House Price Index, which was first published in June, shows home prices in the Midwest led the increase with a 4.7 percent rise in June, resulting in a 0.2 percent year-over-year decline. Prices in the West fell 0.5 percent in the month, and were down 16.9 percent from a year ago, IAS said.

The index may be evidence that a bottoming process is underway for the housing market that has been mired in its worst slump since the 1930s. But the index is not "smoothed" or adjusted for seasonal forces, such as the typically stronger spring and summer selling season, according to IAS.

"Strengthening of the market in the summer can occur even when the longer term market trend might be downward," Dave McCarthy, IAS' chief executive officer, said in a statement. Data shows local markets runs from strong and stable to barebones, he said.

IAS last month said home prices nationwide fell a much harsher 20.1 percent year-over-year in May, after a 3.2 percent drop from April.

The IAS360 index appears more volatile than the widely tracked Standard & Poor's/Case Shiller home price indexes, which last month showed U.S. home prices in 20 metropolitan areas fell 0.9 percent in May from April, and 15.8 percent on the year. Prices rose in seven regions in May, S&P said.

Falling home prices have been erasing homeowners' equity, reducing their ability to refinance risky loans and forcing many into foreclosure, which further depresses real estate values. Economists say the impact of sliding home prices has dented U.S. growth to the point where the nation is near, or in, recession.

The second-largest U.S. mortgage finance company, Freddie Mac, widened its forecasts last week for price drops from the market peak to as much as 20 percent, from an earlier estimate of 15 percent, due to an increase in foreclosures.

However, price cuts by banks seeking to unload the glut of unwanted homes on their books has boosted sales in some areas, paving the way for recovery.

An index of U.S. home sales contracts signed in June surprised analysts last week as it rose in June to its highest level since October. The National Association of Realtors said its index of pending home sales was encouraging, and painted a housing market in transition.

Denver-based IAS specializes in residential real estate valuations and the disposition of bank-owned properties.

(Reporting by Al Yoon; Editing by Tom Hals)