Spin it whichever way you want, but the reports on housing from Case-Shiller and First American CoreLogic show a continued deflationary trend.
From The Wall Street Journal:
U.S. home prices in February rose from a year earlier for the first time in more than three years, according to the S&P Case-Shiller home-price indexes, although month-to-month declines continued for the fifth straight month. ...
The index rose 0.6% from a year earlier, while a 10-city gauge rose 1.4%, marking the first annual gains in both measures since December 2006. But 11 out of 20 cities still experienced year-over-year declines in home prices. On a month-to-month basis prices fell 0.9% in February from January in the 20-city index and 0.6% in the 10-city index. Nineteen of 20 metro areas declined on a monthly basis, while 14 have now fallen for at least four straight months.
From Bloomberg:
Eleven of the 20 cities in the S&P/Case-Shiller index showed a year-over-year decline, led by a 15 percent drop in Las Vegas and a 6 percent decrease in Tampa. San Francisco showed the biggest year-over-year increase, with prices rising 12 percent.
Compared with the prior month, 19 of the 20 areas covered showed a decrease on an unadjusted basis, led by Portland, Oregon, and Minneapolis. San Diego showed the only monthly increase.
Here are two charts are from Goldman, courtesy of my fellow blogger at Zero Hedge, Tyler Durden that better explain the market:
Click charts to enlarge:
Here is the month-over-month change:
According to First American CoreLogic:
National home prices, including distressed sales, increased by 0.3 percent in February 2010 compared to February 2009, according to First American CoreLogic and its Loan Performance Home Price Index (HPI). This was an improvement over January’s year-over-year price decline of 0.5 percent. Excluding distressed sales, year-over-year prices increased in February by 0.6 percent; an improvement over the January non-distressed HPI which fell by 1.1 percent year-over-year.
On a month-over-month basis, the national average home price index fell by 2.0 percent in February 2010 compared to January 2010, which was steeper than the previous one-month decline of 1.6 percent from December to January. Prices are typically weak in the winter months, so seasonal effects may be driving this one-month change.
It is apparent that much of this market is being driven by the federal tax credit (see Government Programs Massively Distorts Housing Market) which is about to cease. First American CoreLogic published a study on the impact of the tax credit and other federal loan modification programs and it bears out my thesis:
The extent and magnitude of recent federal policy intervention in the national housing market has been unprecedented. The analysis indicates that these policies have had a meaningful and positive effect on home sales and prices. Much of this effect has been attributable to the federal homebuyer tax credit. However, the empirical results also indicate that the majority of this effect has already been realized, and any further extension, while still positive, would exhibit diminishing returns. While a reduction in the level of federal housing stimulus is projected to provoke an increase in the level of price deflation, this deflation is modest compared to what has occurred in recent years. These results are consistent with the notion that these policy interventions have helped to stabilize and support the fragile housing market, but have done so by restricting supply and shifting home sales that would have occurred after the market’s eventual stabilization from the future into the present.
With the level of potential foreclosures in the shadow market, everything points to continued deflation of the housing market.
Disclosure: No positions
