S&P Case-Shiller Index Reveals Continued Erosion of Home Price Gains

 |  Includes: ICF, IYR, RWR, VNQ
by: IndexUniverse

The latest (November) release of data from the S&P Case-Shiller Home Prices Indexes shows a continued erosion of home price gains virtually across the board. In fact, year-over-year price gains for November--while still rising--were virtually decimated from year-ago levels: From 2004-2005, the average home price jumped 15.7 percent in November; this year, price gains declined to just 1.7 percent.

Indeed, the numbers are worse than the one-year numbers suggest. Fully 17 of the 20 cities covered by the recently expanded home price indexes showed month-over-month declines from October, with only Charlotte (0.3 percent), Miami (0.5 percent) and Seattle (0.4 percent) posting gains. Prices in Boston – which have led the collapse, and are actually down 5 percent year-over-year – fell by 1.8 percent in November. You shouldn’t extrapolate that out of 12 months, of course, but it’s hard not to think that way (to save you the math, it works out to an annualized loss of more than 20 percent).

One thing that the house price trends make clear, however, is that prices are driven by local economies as much as national trends. The table below shows the index level, November monthly price change and year-over-year price change for the 20 cities covered by the indexes. The index level reflects total gains since 2000, with a base of 100: i.e., an index level of 150 means that the average house price in that city went up 50 percent over the past six years.

The disparity of index levels shows that different parts of the nation participated very differently in the real estate boom. Prices in Detroit, for instance, barely budged, likely thanks to weakness in the U.S. auto economy; in Miami, by contrast, prices have soared.

housing 1
housing 2