NEW YORK, N.Y. ( TheStreet) -- Stocks in the homebuilding sector were mostly lower Tuesday afternoon despite a better-than-expected reading from the Standard & Poor's/Case-Shiller 20-city index of home prices. The index rose 4.6% in May year-over-year, stronger than the 3.9% rise economists had expected. A federal tax credit for homebuyers of up to $8,000 is largely credited with strengthening home sales this past spring as buyers rushed to push up their purchases before the credits expired April 30.
The SPDR S&P Homebuilders ( XHB), an exchange-traded fund that tracks the homebuilder sector, rose in morning trading only to reverse, losing 3.1% in late-afternoon activity. Shares of NVR ( NVR) and Lennar ( LEN), among the XHB's top holdings, bid down 1.7% and 2.6%, respectively. Fellow builders D.R. Horton ( DHI) and PulteGroup ( PHM) were down 0.9% and 1.5%, respectively. A few select small-cap homebuilders managed to eke out share-price gains Tuesday. Standard Pacific ( SPF) gained 3.8%, Brookfield Homes ( BHS) 1.7% and Comstock Homebuilding ( CHCI) 1.7%. The month of May is historically a strong month for home selling, regardless, as families looking to move get ready to do so in the summer months while their kids are out of school on summer vacations. Recent economic reports showed the housing market has a long way to go toward sustainable recovery, and many economists feel May's uptick in home prices will not continue through 2010. "I bet in six months, 15 to 20 cities will have falling prices," said IHS Global Insight economist Patrick Newport, who expects home prices to fall between 6% and 8% before rebounding in 2011. >>Search for Highest Dividends by Rate or Yield Home prices rose 1.3% from April to May, according to the report released Tuesday morning, with 19 of the 20 major metropolitan cities measured reporting price increases. Las Vegas was the sole city to record lower prices in May; Minneapolis and Atlanta had the strongest month-over-month price growth.