Home Prices Falling Faster

While the price of gasoline, food and lots of other things is going up, the cost of buying a house continues to go down.

The latest evidence is contained in the S&P Case-Shiller home price indices for February, in which every metro area accept Detroit, which hit bottom long ago. The 20-city average of home prices was 3.3 percent lower than a year ago, and was down 1.1 percent from the previous three months.

It's the seventh straight month of widespread price declines and suggests that homes are still over-valued, considering what buyers are willing and able to pay.

Little, if any, good news

“There is very little, if any, good news about housing,” said David M. Blitzer, Chairman of the Index Committee at S&P Indices. “Prices continue to weaken, trends in sales and construction are disappointing.”

Prices for the 10 and 20-city composites are only slightly higher than their April 2009 bottom.

Washington D.C. was the only market to post a year-over-year gain with an annual growth rate of 2.7 percent. Ten of the 11 cities that made new lows in January 2011 saw new lows again in February 2011.

Going down

In February 2011, the 10-City and 20-City Composites recorded annual returns of -2.6 percent and -3.3 percent, respectively. On a month-over-month basis, the 10- and 20-City Composites were both down 1.1 percent in February versus January. Prices even fell in San Diego, which had posted 15 consecutive months of positive annual rates.

“Atlanta, Cleveland and Las Vegas join Detroit as cities with home prices below their 2000 levels, and Phoenix is barely above its January 2000 level after a new index low,” Blitzer said.

When coupled with recent data on existing-home sales, housing starts, foreclosure activity and employment, Blitzer says this report confirms the housing recovery is painfully slow.

Worse than expected

The housing market is performing much worse any anyone expected a year ago. But the Case-Shiller numbers make it clear that, once the home buyers tax credit expired early last year, the feeble recovery began to falter.

The falling prices have created opportunities for investors and bargain hunters, of course. The latest report on existing home sales by the National Association of Realtors shows 40 percent of March sales were for distressed properties, primarily foreclosures and short sales.