Home Prices Continue Their Descent

By Heather Bell

Well, this is a relief - we were running out of ways to describe the unrelievedly bleak scenario that has been the U.S. housing market as represented by the S&P/Case-Shiller Home Price Indexes. Now, there by no means is any sort of turnaround occurring in home prices, but there were actually two - count 'em - bright spots in the March numbers amid the otherwise ongoing grimness. OK, maybe not "bright spots" ... more like faint glimmerings.

After all, both composite indexes fell further in March - the 10-city and 20-city composites were down 2.4% and 2.2%, respectively, for the month, and a record 15.3% and 14.4% for the 12-month period. The quarterly S&P/Case-Shiller U.S. National Home Price Index - which covers the nine U.S. census divisions - was down 14.1% from the first quarter of 2007, the largest decline in its 20-year history. To put things in perspective, S&P said that the quarterly index had bottomed out at a 2.8% annual decline during the 1990-1991 housing recession.

"The steep downturn in residential real estate continues. There are very few silver linings that one can see in the data," said David M. Blitzer, Chairman of the Index committee at Standard & Poor's.

On an annual basis, 19 of the 20 metro areas covered by the S&P/Case-Shiller indexes are in negative territory. Eleven of them are showing double-digit declines, with six of those down more than 20%. Blitzer noted that 15 of the metro areas, or three-fourths, are actually at record lows. According to S&P, the areas that benefitted the most from the real estate boom are now leading the bust.

Las Vegas is in the worst shape, down 25.9%, followed by Miami and Phoenix, which are down 24.6% and 23.0%, respectively. Only Charlotte has continued to cling to positive territory with a meager 0.8% annual increase. Dallas is next with a decline of just 3.3%, while Portland is down 4.0%.

The monthly returns were a little better. The declines weren't as steep as last month's reading for February, for one thing, and for another, after seven months of monthly declines across all 20 metro areas, two actually registered positive returns. Charlotte was up 0.2%, while Dallas was up 1.1%. However, no one thinks these isolated positive returns indicate a bottom to the decline is near.

Miami had the worst performance, down 4.5%, followed by Las Vegas, down 4.4%, and Los Angeles, down 3.6%.

Source: Standard & Poor's

With the Conference Board's Consumer Confidence Index, which also came out Tuesday, declining for the fifth consecutive month in May and hitting a 16-year low, it seems doubtful that consumers will be looking to buy much of anything, let alone a house. A real turnaround in housing does not appear to be in the cards anytime soon.

Comments

[Robespierre:]

With all these great news no wonder builders are all up today ;)

2008 May 27 08:10 PM

[Everyday Fi...:]

What I've found to be of interest is that the homebuilding stocks have done quite well this year - For instance, Hovnanian up 11% vs. S&P down 5.7%. Orleans up 33%...more:

everydayfinance.blogsp...

"Case, co-founder of a home-price index that bears his name, said more auctions of foreclosed properties will hasten the reduction of inventories from record levels and may lead to a faster housing recovery." according to Bloomberg tonight.

www.bloomberg.com/apps...

2008 May 27 10:55 PM

[John Pseudonym:]

It took 15 years to hit +16%

It took a little over a year to hit -16%

Looks like the zero line has been reset and we've got a decade or more before home prices get back to the 2005 level.

2008 May 28 10:37 AM

[Observor:]

It's interested to notice that every sharp fell always follows with a sharp rebond. All rebonds actually took less than a year. If you miss a few month window, you missed a lot!

2008 Jun 03 03:02 PM