Home Prices Generally Sideways in Past Year

by bkrigbaum@solagroup.com


NEW YORK July 27, 2010 — Data through
May 2010, released by Standard & Poor’s for its S&P/Case-Shiller Home
Price Indices, show that the annual growth rates in 15 of the 20 MSAs and the
10- and 20-City Composites improved in May compared to those reported for April
2010. The 10-City Composite is up 5.4% and the 20-City Composite is up 4.6% from
where they were in May 2009. While 19 MSAs and both Composites reported positive
monthly changes in May over April, only 12 of the MSAs and the two Composites
saw better month-over-month growth rates in May than those reported in


While still positive, Boston, Charlotte, Cleveland, Dallas and
Denver reported
weaker annual growth rates compared to their reports from last month. Seven of
the 20 MSAs are still reporting negative annual growth rates with May’s


“While May’s report on its own
looks somewhat positive, a broader look at home price levels over the past year
still does not indicate that the housing market is in any form of sustained
recovery,” says David M. Blitzer, Chairman of the Index Committee at Standard
& Poor’s. “Since reaching its recent trough in April 2009, the housing
market has really only stabilized at this lower level. The two Composites have
improved between 5 and 6% since then, but this is no better than the improvement
they had registered as of October 2009. The last seven months have basically
been flat.”


“The May 2010 data for 15 of the
20 MSAs and the two Composites show an improvement in annual returns compared to
April’s report. With the month-over-month data, while 19 of the 20 MSAs and the
two Composites were positive, we are in a strong seasonal period for home
prices, so that was largely expected. In addition, there may still be some
residual impact from the homebuyers’ tax credit, since they affect any purchase
that closes through June 30th 2010. We need to watch where the housing markets
will go after these temporary stimuli go away. June’s existing and new home
sales and housing starts data do not show much real improvement in those
statistics either. It still looks possible that the housing market might bounce
along the bottom for the foreseeable future, before showing any real improvement
that will filter through to the rest of the economy.”


As of May 2010, average home
prices across the United
are back to the levels where they were
in the autumn of 2003. Measured from June/July 2006 through May 2010, the
peak-to-date figures for the 10-City Composite and 20-City Composite are

-29.6% and -29.1%, respectively. In May, Las Vegas posted a new index low as measured by
the current housing cycle, where it peaked in August 2006. The peak-to-trough
figure is -56.4%, with that market generally returning any gains it had posted
since 2000. Detroit is the only market that is worse off.
Its index is at levels last seen in late 1994, indicating that any appreciation
in value during the past 15 years is now gone. Nineteen of the 20 MSAs and both
Composites showed month-over-month increases in May. The 10- and 20-City
Composites were up 1.2% and 1.3%, respectively. San Diego continues to improve, with its 13th
consecutive positive monthly increase. Miami and
New York, the
two markets that had declined in April, posted positive monthly changes in May
2010, increasing 0.9% and 0.8%, respectively. Las Vegas on the other hand, showed a drop in
index level by 0.5% in May as compared to April 2010.

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