Seven Cities Show Slight Housing Price Gains in May

By Murray Coleman

As investors were selling off their stocks to signal a broad correction in U.S. markets in May, apparently so were home owners.

The latest results for the S&P/Case-Shiller Home Prices indexes, which measure existing single-family home sales in 20 major markets across the country, slide 0.9 percent in May from April, bringing the measure down 15.8% from the same period last year.

But the drop-off wasn't as steep as from March to April when sales in the 20 regions dropped 1.3%, according to S&P. And the unadjusted results painted a less-harsh picture of residential markets than many economists had been forecasting.

Three areas (Portland, Minneapolis and Atlanta) actually registered slight upticks. And four regions had 1% gains—Boston, Charlotte, Dallas and Denver. In fact, most others in the indexes, while remaining negative, pared those losses from the previous month.

Still, since August 2006, "there has not been one month where we have seen overall price increases, as measured by the two composites," said David Blitzer, chairman of the index committee at Standard & Poor's, in a statement.

In May, markets that experienced large gains in the recent real estate boom continue to be the biggest decliners. Miami and Las Vegas were the worst performers, returning -3.6% and -2.9%, respectively. At the other end of the spectrum were Charlotte and Dallas, which have recorded three consecutive months of positive returns. These two markets are also showing the smallest annual declines, with Charlotte down 0.2% and Dallas down 3.1% versus May of 2007.

From a longer-term perspective, since January 2000, the best-performing markets continue to be Washington, Los Angeles, New York and Miami. However, housing in Detroit is now lower than it was more than eight years ago.

Over the month, no region reported gains in excess of 1%. But for those that reported monthly declines, three were in excess of 2%.

Regional patterns stood out in May. The Sunbelt cities, which saw the biggest booms, now are seeing the largest declines. Those are led by Miami, Tampa, Phoenix, Las Vegas, San Diego and Los Angeles. Blitzer said that the Northeast, including Boston and New York, appears cyclical but less volatile.

Meanwhile, he says the Midwest, paced by Detroit and Cleveland, still face difficult local economies.

The S&P/Case-Shiller Composite index of 10 home price benchmarks is a value-weighted average of the 10 original metro area indexes. The S&P/Case-Shiller Composite index of 20 home price benchmarks is a value-weighted average of the 20 metro area indexes. The indexes have a base value of 100 in January 2000; thus, for example, a current index value of 150 translates to a 50% appreciation rate since January 2000 for a typical home located within the subject market.

Comments

[Tim Plaehn:]

One month of across the country price gains and the gold rush will be on. Many, many on the side lines who do not want to miss the bottom.

2008 Jul 29 12:12 PM

[Malkiel:]

Okay, Tim, so who's going to offer mortgage commitments to those eager bottom-fishers? Who's waiting to buy those mortgages and package them as securities for investors? Are there any investors buying that stuff again? We're not lacking for buyers any more, we're lacking for lenders...

2008 Jul 29 05:31 PM

[johnthebear:]

Any word on commercial property sales in those same cities? If it is tough getting a house loan, it must really be tough getting a $1-5 million commercial loan.

2008 Jul 29 10:10 PM