Case-Shiller Joins the Club – All Indices In Double Dip Territory

Case-Shiller home price index entered double dip territory with its March 2011 index surpassing the recession low point set in April 2009 , all other major home price indices are already in double dip territory.

Data through March 2011, released today by Standard & Poor’s 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 declined by 4.2% in the first quarter of 2011, after having fallen 3.6% in the fourth quarter of 2010. The National Index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels.

As of March 2011, 19 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were down compared to March 2010. Twelve of the 20 MSAs and the 20-City Composite also posted new index lows in March. With an index value of 138.16, the 20-City Composite fell below its earlier reported April 2009 low of 139.26. Minneapolis posted a double-digit 10.0% annual decline, the first market to be back in this territory since March 2010 when Las Vegas was down 12.0% on an annual basis. In the midst of all these falling prices and record lows, Washington DC was the only city where home prices increased on both a monthly (+1.1%) and annual (+4.3%) basis.  Seattle was up a modest 0.1% for the month, but still down 7.5% versus March 2010.

Each of the indices use a different methodology in compiling their indexes – and no index is perfect.  In this case, however, all are demonstrating the same downward trend – and Case-Shiller is now showing the least decline.

Notice the bounce up on the National Association of Realtors (NAR) home prices which is April data.  This is the annual seasonal bounce we see every year – and this effect should be seen in all indices with release of April indexes.  The difference is the bounce is coming from a lower starting point in double dip territory.  Combine this with terrible pending home sales (which will evidence beginning with May price data), and this housing season does not look like  a recovery is yet on the horizon.

Here is a synopsis of the comments of the authors of the various indices:

Case Shiller sees no end yet to the housing decline.

“This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation. The National Index, the 20-City Composite and 12 MSAs all hit new lows with data reported through March 2011. The National Index fell 4.2% over the first quarter alone, and is down 5.1% compared to its year-ago level. Home prices continue on their downward spiral with no relief in sight.” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “Since December 2010, we have found an increasing number of markets posting new lows. In March 2011, 12 cities – Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland (OR) and Tampa – fell to their lowest levels as measured by the current housing cycle. Washington D.C. was the only MSA displaying positive trends with an annual growth rate of +4.3% and a 1.1% increase from its February level.

“The rebound in prices seen in 2009 and 2010 was largely due to the first-time home buyers tax credit.  Excluding the results of that policy, there has been no recovery or even stabilization in home prices during or after the recent recession. Further, while last year saw signs of an economic recovery, the most recent data do not point to renewed gains.

“Looking deeper into the monthly data, 18 MSAs and both Composites were down in March over February. The only two which weren’t, are Washington DC, up 1.1%, and Seattle, up 0.1%. Atlanta, Cleveland, Detroit and Las Vegas are the markets where average home prices are now below their January 2000 levels. With a March index level of 100.27, Phoenix is not far off.”

CoreLogic‘s Mark Fleming, chief economist is seeing a the first home buyers stimulus as the reason for the double dip.

Last year the First Time Homebuuyer Tax Credit pulled a significant number of sales forward and, to an extent, artificially supported prices. So, absent the tax credit, it is understandable that we see prices continue to decline when compared with last year.  As we move further away from tthat support, we will see a leveling of prices and eventually organic improvements in the market.

The National Association of Realtors is blaming the weak market conditions on credit:

Lawrence Yun, NAR chief economist, said the market is underperforming. “Given the great affordability conditions, job creation and pent-up demand, home sales should be stronger,” he said. “Although existing-home sales are expected to trend up unevenly through next year, unnecessarily tight credit is continuing to restrain the market, along with a steady level of low appraisals that result in contract cancellations.”

Real time data provider Altos Research sees a strong seasonal upswing in home prices in their April data – but is starting from a historically low level:

The historical view tells us a seasonal increase in activity is expected at this time of year. Regardless of what’s happening in the economy as a whole, we see a seasonal spike in both median prices and inventory when the country starts to thaw from the winter months. The Altos Research 20-City Composite trends are displayed in the chart below

Read through the related articles below from various authors.  Econintersect publishes all knowledgeable views of the housing market.  The common thread is that no one is seeing any indication that the decline is over in existing home sales or prices.

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