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S&P/Case-Shiller Sees Home Prices Sputtering Into Q4 and Experience Insignificant Quarterly Change
Nov 29, 2011

Data through September 2011, released by S&P Indices for its S&P/Case-Shiller Home Price Indices, shows that nationwide, home prices did not register a significant change in the third quarter of 2011, with the U.S. National Home Price Index up by only 0.1 percent from its second quarter level. The national index posted an annual decline of 3.9 percent, an improvement over the 5.8 percent decline posted in the second quarter of 2011. Nationally, home prices are back to their first quarter of 2003 levels. As of September 2011, the annual rate of change in 14 of the 20 MSAs and both Composites, covered by S&P/Case-Shiller Home Price Indices, improved versus August. Atlanta, Las Vegas, Los Angeles, San Francisco, Seattle and Tampa recorded lower annual declines in September compared to August. Detroit and Washington, D.C. were the only two MSAs to post positive annual rates of +3.7 percent and +1.0 percent respectively. Detroit has now recorded three consecutive months of positive annual rates. The chart above shows the annual returns of the U.S. National, the 10-City Composite and the 20-City Composite Home Price Indices. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 3.9 percent decline in the third quarter of 2011 over the third quarter of 2010. In September, the 10- and 20-City Composites posted annual rates of decline of 3.3 percent and 3.6 percent, respectively. Eighteen of the 20 MSAs and both monthly Composites had negative annual rates in September 2011, the only exceptions being Detroit and Washington, D.C. “Home prices drifted lower in September and the third quarter,” said David M. Blitzer, chairman of the Index Committee at S&P Indices. “The National Index was down 3.9 percent versus the third quarter of 2010 and up only 0.1 percent from the previous quarter. Three cities posted new index lows in September 2011—Atlanta, Las Vegas and Phoenix. Seventeen of the 20 cities and both Composites were down for the month. Over the last year home prices in most cities drifted lower. The plunging collapse of prices seen in 2007-2009 seems to be behind us. Any chance for a sustained recovery will probably need a stronger economy." The chart above shows the index levels for the U.S. National Home Price Index, as well as its annual returns. As of the third quarter of 2011, average home prices across the United States are back at their early 2003 levels. As of the third quarter, the National Index level has recovered by +3.9 percent from its recent index low in the first quarter of 2011. However, it is 3.9 percent below its 2010 levels in the third quarter. Atlanta, Las Vegas and Phoenix posted record index lows with September’s data. While Phoenix home prices are almost back to their January 2000 levels, Atlanta and Las Vegas prices have fallen below these levels. “Detroit and Washington, D.C. posted positive annual rates of change and also saw an improvement in these rates compared to August," said Blitzer. "Only New York, Portland and Washington, D.C. posted positive monthly returns versus August. It is a bit disturbing that we saw three cities post new crisis lows. For the prior three or four months, only Las Vegas was weakening each month. Now Atlanta and Phoenix have fallen to new lows too. On a monthly basis, Atlanta actually posted a record low rate of -5.9 percent in September over August. The markets are fairly thin, and the relative lack of closed transactions might be exacerbating the downside. The relative good news is that 14 cities saw improvements in their annual rates of change, versus the six that weakened.”
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