S&P/Case-Shiller Report Finds Home Prices Weaken as Eight Cities Reach New Lows

Tuesday, January 25, 2011 - 11:40

Data through November 2010, released by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices has shown a deceleration in the annual growth rates in 17 of the 20 Metropolitan MSAs and the 10- and 20-City Composites compared to what was reported for October 2010. The 10-City Composite was down 0.4 percent and the 20-City Composite fell
1.6 percent from their November 2009 levels. Home prices fell in 19 of 20 MSAs and both Composites in November from their October levels. In November, only four MSAs—Los Angeles, San Diego, San Francisco and Washington D.C.—showed year-over-year gains. The Composite indices remain above their spring 2009 lows; however, eight markets—Atlanta; Charlotte; Detroit; Las Vegas; Miami; Portland, Ore; Seattle and Tampa—hit their lowest levels since home prices peaked in 2006 and 2007, meaning that average home prices in those markets have fallen even further than the lows set in the spring of 2009.

The chart above depicts the annual returns of the 10-City and the 20-City Composite Home Price Indices. In November 2010, the 10-City and 20-City Composites recorded annual returns of -0.4 percent and -1.6 percent, respectively. November was the sixth consecutive month where the annual growth rates moderated from their prior month’s pace. Since May 2010, the housing market has experienced an unambiguous deceleration in home price returns. The 10-City Composite has reentered negative territory with a -0.4 percent annual growth rate in November, versus the +5.4 percent reported six months prior in May, and the 20-City Composite was down 1.6 percent in November versus its +4.6 percent May point.
“With these numbers more analysts will be calling for a double-dip in home prices. Let’s take a moment to define a double-dip as seeing the 10- and 20-City Composites set new post-peak lows," said David M. Blitzer, chairman of the Index Committee at Standard & Poor's. "The series are now only 4.8 percent and 3.3 percent above their April 2009 lows, suggesting that a double-dip could be confirmed before Spring. Certainly eight cities setting new lows, and with the only positive news concentrated in southern California and Washington DC, the data point to weakness in home prices. With an annual growth rate of +3.5 percent in November, Washington, D.C. was the strongest market, but still well below the +7.7 percent annual rate of growth seen in May 2010. The only city with a gain in November was San Diego, up a scant 0.1 percent. While San Diego, Los Angeles and San Francisco are still ahead from November 2009, their annual rates are shrinking in recent months."

S&P/Case-Shiller Home Price Indices

The chart above shows the index levels for the 10-City and 20-City Composite Indices. As of November 2010, average home prices across the United States are back to the levels where they were in latter half of 2003. Measured from June/July 2006 through November 2010, the peak-to-current decline for both the 10-City Composite and 20-City Composite is -30.3 percent. The improvements from their April 2009 trough are +4.8 percent and +3.3 percent, respectively.
The 10-City Composite was down 0.8 percent and the 20-City Composite fell by one percent in November. Nineteen of 20 of the metro areas also declined in November; San Diego was up just 0.1 percent. Thirteen of the MSAs were down by one percent or more in November, with Detroit posting the largest decline of 2.7 percent.
As of November 2010, Las Vegas is down 57.2 percent from its peak in August 2006; Phoenix is 53.9 percent down from its peak on June 2006 and Miami is 48.8 percent down from its peak on December 2006.
The table below summarizes the results for November 2010. The S&P/Case-Shiller Home Price Indices are revised for the 24 prior months, based on the receipt of additional source data. More than 23 years of history for these data series is available, and can be accessed in full by clicking here.

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