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Home Prices Suffer Double Digit Declines

No evidence of bottom in housing market slump

October 1, 2008

Data through July 2008, released by Standard & Poor's for its S&P/Case-Shiller Home Price Indices, shows continued record declines and a continuation in the trend of double digit declines across many cities in the prices of existing single family homes across the United States.

The 10-City level marked its 10th consecutive monthly report of a record decline, beginning with data reported for October 2007. While the annual returns of two indices continue to reach record lows, the pace of the decline has slowed, particularly over the last three months. For the three months of May thru July, home prices cumulatively fell about 2.2 percent; whereas for the three months of February thru April, and November 2007 thru January, the cumulative rates of decline were closer to 6.0-6.5 percent.

"There are signs of a slow down in the rate of decline across the metro areas, but no evidence of a bottom," said David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "Little positive news can be found when cities like Las Vegas and Phoenix report annual declines as large as -29.9 percent and -29.3 percent, respectively, and all 20 cities are still in negative territory on a year-over-year basis. The Sunbelt continues to be the story, with the seven cities that basically represent that area reporting annual declines roughly between 20 and 30 percent. While some cities did show some marginal improvement over last month's data, there is still very little evidence of any particular region experiencing an absolute turnaround."

While there are differences across regions, at the national level the housing market peaked around June/July of 2006. As of July 2008, two years later, the 10-City Composite has fallen by a total of 21.1 percent and the 20-City Composite is down 19.5 percent.

Las Vegas remains the weakest market, reporting an annual decline of 29.9 percent, followed by Phoenix and Miami at -29.3 percent and -28.2 percent, respectively. Atlanta, Dallas, Minneapolis and Tampa showed improvements in their annual and monthly returns, but all four are still too close to their recent lows to determine if the markets have stabilized. While their annual returns are negative, Atlanta, Boston, Dallas, Denver and Minneapolis all reported positive returns for the three months or more.

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