September 29, 2009
The price of the average single-family home rose more than expected in July, according to the latest S&P/Case-Shiller Home Price Index. It's the latest evidence suggesting the housing market may have reach a bottom.
Data through July 2009 show that, although still negative, the annual rate of decline of the 10-City and 20-City Composites improved compared to last months reading. This marks approximately six months of improved readings in these statistics, beginning in early 2009.
The 10-City and 20-City Composites declined 12.8 percent and 13.3 percent, respectively, in July compared to the same month last year. All 20 metro areas also showed an improvement in the annual rates of decline, with Julys readings compared to June.
The rate of annual decline in home price values continues to decelerate and we now seem to be witnessing some sustained monthly increases across many of the markets said David M. Blitzer, Chairman of the Index Committee at Standard & Poors. The two composites and all metro areas are showing an improvement in the annual rates of return, as seen through a moderation in their annual declines. Looking at the monthly data, the 10-City and 20-City Composites and 18 of the 20 metros areas increased in July.
"In addition, both Composites and 13 of the MSA have had at least three consecutive months of positive prints. These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyers Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures.
As of July 2009, average home prices across the United States are at similar levels to where they were in the autumn of 2003. From the peak in the second quarter of 2006, the 10-City Composite is down 33.5 percent and the 20-City Composite is down 32.6 percent.
In terms of annual declines, despite the overall improvement, all metro areas and the two composites remain in negative territory, with 14 of the 20 metro areas and both composites in double digits. On the positive side, Cleveland, Dallas and Denver are closing in on positive territory with July readings of -1.3 percent, -1.6 percent and -2.9 percent, respectively. Las Vegas posted its lowest index level in July since its peak in August of 2006, resulting in a 54.8 percent peak to trough decline.
In the monthly data, only Seattle and Las Vegas showed monthly declines. Thirteen of the 20 metro areas had three or more consecutive positive returns; and 16 MSAs and the two composites reported monthly returns greater than +1.0 percent.
An increase in home prices would be good news for homeowners whose homes and now worth less than what they paid. Many have been unable to sell their homes, contributing the the rise in foreclosures.
