Home Prices Rise, Again

Data through August 2011, released today by S&P Indices for its S&P/Case-Shiller Home Price Indices showed increases of +0.2 percent for the 10- and 20-City Composites in August versus July.

Ten of the 20 cities covered by the indices also saw home prices increase over the month. In addition, 16 of the 20 MSAs and both Composites posted improved annual returns compared to July’s data; Los Angeles and Miami saw no change in annual returns in August; and Atlanta and Las Vegas saw their annual rates of change fall deeper into negative territory. The 10- and 20-City Composites posted annual returns of -3.5 percent and -3.8 percent versus August 2010, respectively. At -8.5 percent, Minneapolis posted the lowest year-over-year return, but has
improved in each of the last three months. Detroit and Washington DC were the only two cities to post positive annual returns of +2.7% and +0.3% respectively.

In August 2011, the 10- and 20-City Composites recorded annual returns of -3.5 percent and -3.8 percent, respectively. Both Composites and 16 MSAs – Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington DC – saw their annual rates improve in August compared to July.

“There was some weakness in the monthly statistics, as 10 of the cities post price declines in August over July,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “And even though the annual rates are largely improving, 18 MSAs and both Composites are still negative. Nationally, home prices are still below where they were a year ago. The 10-City Composite is down 3.5 percent and the 20-City is down 3.8 percent compared to August 2010.

S&P: Dallas Home Prices Bottomed in 2009

Data through June 2011, released today by S&P Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index increased by 3.6 percent in the second quarter of 2011, after having fallen 4.1 percent in the first quarter of 2011. With the second quarter’s data, the National Index recovered from its first quarter low, but still posted an annual decline of 5.9 percent versus the second quarter of 2010. 

Nationally, home prices are back to their early 2003 levels. 

As of June 2011, 19 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were up versus May – Portland was flat. However, they were all down compared to June 2010. Twelve of the 20 MSAs and both Composites have now increased for three consecutive months, a  sign of the seasonal strength in the housing market. None of the markets posted new lows with June’s report. 

Minneapolis posted a double-digit 10.8 percent annual decline; Portland is not far behind at -9.6 percent. Thirteen of the cities and both composites saw improvements in their annual rates; however; they all are in negative territory and have been so for three consecutive months.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 5.9 percent decline in the second quarter of 2011 over the second quarter of 2010. In June, the 10- and 20-City Composites posted annual rates of decline of 3.8 percent and 4.5 percent, respectively. Thirteen of the 20 MSAs and both monthly Composites saw their annual growth rates improve, although remaining in negative territory in June.

“This month’s report showed mixed signals for recovery in home prices. No cities made new lows in June 2011, and the majority of cities are seeing improved annual rates. The National Index was up 3.6%

from the 2011 first quarter, but down 5.9 percent compared to a year-ago,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. 

“Looking across the cities, eight bottomed in 2009 and have remained above their lows. These include all the California cities plus Dallas, Denver and Washington DC, all relatively strong markets. At the other extreme, those which set new lows in 2011 include the four Sunbelt cities – Las Vegas, Miami, Phoenix and Tampa – as well as the weakest of all, Detroit.

These shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together.

“As with May’s report, June showed unusually large revisions across the same MSAs – Detroit, New York, Tampa and Washington DC. Our sales pairs data indicate that, once again, these markets reported a lot more sales closing in prior months, which caused the revisions. Since deed recording is usually county based, if the price trends across counties are very different, then delays from a subset of counties can lead to larger revisions. And data lag lengths tend to vary across the counties within a metro area. If counties with relatively stronger/weaker markets report sales with longer/shorter lags, this will result in larger revisions as we receive the lagged data. Revisions are also likely to be larger when sales volumes are low or the proportions of distressed/non-distressed sales are changing rapidly. Any and all of these factors are likely contributing to the revisions we have seen over the past few reports.

Housing Prices Up for Quarter

Clear Capital released its monthly Home Data Index™ (HDI) Market Report today, with news of U.S. home price gains of 4.1 percent comparing the most recent rolling quarter to the previous one. The report shows recent gains off the record low in home prices experienced this past winter have not been enough to change the broader housing picture, which remains down 7.9 percent since June 2010, and down 1.8 percent from June 2009.

“Building off last month’s minimal quarterly gains, prices continue to correct from winter’s extended declines,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “Although this is encouraging, many markets are still near, or at record lows as REO saturation remains a significant proportion of all sales activity.”

The company says the gains of 4.1 percent reported in this report are improving upon last month's 0.9 percent rolling quarter uptick. 

Year-over-year home prices however are mired in negative territory off last year's tax credit highs, with three out of the four regions (West, Midwest, and South) posting year-over-year price declines greater than -7.3 percent.

Driven by stronger spring and early summer sales, all quarterly prices are up significantly among the highest performing markets compared to the slower winter buying season. The markets of Milwaukee, Rochester and Pittsburgh posted the strongest quarterly gains on seasonal influences.

Houes in Pittsburgh

While REO saturation as a whole continued to be significant in highest performing markets, the average saturation rate fell to 22.7 percent, a three percent decline from last month. Rochester, Pittsburgh, Boston and New York led the way, posting single digit rates of REO saturation.

Elevated distressed home sale activity continues to take a toll on the lowest performing markets across the country. 

S&P: Seasonal Improvement in Home Prices in Dallas and Elsewhere

Data through May 2011, released by S&P Indices for its S&P/CaseShiller Home Price Indices, the leading measure of U.S. home prices, showed a second consecutive month of increase in prices for the 10- and 20-City Composites. The 10- and 20-City Composites were up 1.1 percent and 1.0 percent, respectively, in May over April. Sixteen of the 20 MSAs and both Composites posted positive monthly increases; Detroit, Las Vegas and Tampa were down over the month and Phoenix was unchanged.

Dalls showed a gain of .4 percent during the month and a 4.7 percent decline over a year period.

On an annual basis, Washington DC was the only MSA with a positive rate of change, up 1.3 percent. The remaining 19 MSAs and the 10- and 20- City Composites were down in May 2011 versus the same month last year. Minneapolis fared the worst posting a double-digit decline of 11.7 percent.

“We see some seasonal improvements with May’s data,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “This is a seasonal period of stronger demand for houses, so monthly price increases are to be expected and were seen in 16 of the 20 cities. The exceptions where prices fell were Detroit, Las Vegas and Tampa. However, 19 of 20 cities saw prices drop over the last 12 months. The concern is that much of the monthly gains are only seasonal.

“May’s report showed unusually large revisions across some of the MSAs. In particular, Detroit, New York, Tampa and Washington DC all saw above normal revisions. Our sales pairs data indicate that these markets reported a lot more sales from prior months, which caused the revisions. The lag in reporting home sales in these markets has increased over the past few months. Also, when sales volumes are relatively low, as is the case right now, revisions are more noticeable.

“Other recent housing statistics show that single-family housing starts were up moderately in June, and are at about the same pace as a year ago. Existing-home sales were flat in June, reportedly because of contract cancellations and tight credit. The S&P/Experian Consumer Credit Default indices showed a continuing decline in mortgage default rates since last winter. Other reports confirm that banks have tightened lending standards in the past year, making it harder to qualify for a mortgage despite very low interest rates.

Combined, these data all support a continuation of the ‘bounce-along-the-bottom’ scenario we have witnessed in the housing market over the past two years.

“While the monthly data were encouraging, most MSAs and both Composites fared poorly in annual terms.

Nineteen of the 20 MSAs and the two Composites posted negative annual growth rates in May 2011. The 10-City Composite was down 3.6 percent and the 20-City Composite was down 4.5 percent in May 2011 versus May 2010. Minneapolis posted a double-digit decline in annual rate of 11.7 percent. The only beacon of hope was Washington D.C. with a +1.3 percent annual growth rate and a +2.4 percent monthly increase. We have now seen two consecutive months of generally improving prices; however, we might have a long way to go before we see a real recovery. Sustained increases in home prices over several months and better annual results need to be seen before we can confirm real estate market recovery.”