Housing tumbles in August, but still up from a year prior

Data through August 2010, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show a deceleration in the annual growth rates in 19 of the 20 MSAs and the 10- and 20-City Composites in August compared to what was reported for July 2010. The 10-City Composite was up 2.6% and the 20-City Composite was up 1.7% from their levels in August 2009. Home prices decreased in 15 of the 20 MSAs and both Composites in August from their July levels.  Data Via S&P:

10 city and 20 city S&P/ Shiller composites
 The chart above depicts the annual returns of the 10-City and 20-City Composite Home Price Indices with increases of 2.6% and 1.7%, respectively, in August 2010 compared to the same month in 2009.

In August, almost all of the 20 MSAs posted negative annual growth rates.  Only one market saw an improvement July to August and that was New York which came in just above par. 

The biggest eyesores are Pheonix, Tampa and Las Vegas.  Las Vegas and Tampa have big year over year declines, while Pheonix has declined over 2% in just one month. This says that the housing market has definitely not stabilized in the immediate term and we still feel that there is another 10-20% further decline in housing, especially if there is inflation which seems likely. 

The housing prices increases that we saw over the course of the last year seem highly influenced from the homebuyers tax credit, which is now gone.  The gaming of the housing prices to stave off further housing price declines seemed to have worked temporarily but this kind of meddling will never be able to fix the maladies of the housing market.  We need price declines and it seems like prices are heading in the right direction (for the markets at least).

Note that there is a small discrepancy between the release and the actual data itself.  We believe that is due to the fact that once survey is compiled by Fiserv and one by S&P.  In our survey we used stricly data via S&P:

Case Shiller data through August 2010
Via S&P:  
“A disappointing report. Home prices broadly declined in August. Seventeen of the 20 cities and both Composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Over the last four months both the 10- and 20-City Composites show slowing growth, after sustaining consistent gains since their April 2009 troughs.

The month-over-month growth rates tell the same story. Fifteen of the 20 MSAs and the two Composites saw a decline in the month of August as compared to July levels. The 10- and 20-City Composites fell 0.1% and 0.2%, respectively. Indeed, the housing market appears to have stabilized at new lows. At this time, it does not seem that any of the markets are hanging on to the temporary momentum caused by the homebuyers’ tax credits.”
Mortgage Orb:  Why home prices will drop at least down to 2003 levels
How increasing inflation could kill housing prices


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