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Home Prices Post Record Decline

Reduction in third quarter is largest on record

November 25, 2008

The decline in the S&P/Case-Shiller U.S. National Home Price Index – which covers all nine U.S. census divisions – posted a record 16.6 percent drop in the third quarter of 2008 versus the third quarter of 2007. This has increased from the annual declines of 15.1 percent and 14.0 percent, reported for the second and first quarters of the year, respectively.

The 10-City and 20-City Composites continue to set new records, with annual declines of 18.6 percent and 17.4 percent, respectively.

"The turmoil in the financial markets is placing further downward pressure on a housing market already weakened by its own fundamentals." said David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "All three aggregate indices and 13 of the 20 metro areas are reporting new record rates of decline. Looking at the returns of the U.S. National Index, prices are back to where they were in early 2004.

As of September 2008, the 10-City Composite is down 23.4 percent from its peak, the 20-City Composite is down 21.8 percent and the National Composite is down 21.0 percent."

Phoenix was the weakest market, reporting an annual decline of 31.9 percent, followed by Las Vegas, down 31.3 percent, and San Francisco at -29.5 percent. Miami, Los Angeles, and San Diego did not fair much better with annual declines of 28.4 percent, 27.6 percent and 26.3 percent, respectively.

Dallas and Charlotte faired the best in September in terms of relative year-over-year returns. While also in negative territory, their declines remained in single digits of -2.7 percent and -3.5 percent, respectively. However, both are at rates of decline lower than those reported in August's numbers.

In addition, Charlotte also reported its largest monthly decline on record, down 1.3 percent. Monthly returns were negative across the board. Cleveland was the one market that showed any improvement in its year-over-year returns reporting -6.4 percent compared to the -6.6 percent reported for August.

The S&P Case-Shiller indices closely reflect separate industry reports that show median home values falling across the country. However, though not reported by S&P Case-Shiller, sales have risen in some of the areas where prices have fallen the fastest, suggesting the battered market could be nearing a bottom.

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