Home prices in 20 U.S. metropolitan areas were down from a year earlier for an eighth straight month in August, a private survey showed today.
Values dropped 4.4 percent in the 12 months ended August, the most since records began in 2001, according to the S&P/Case- Shiller home-price index.
More lending restrictions and higher mortgage costs are prolonging the housing slump, now entering its third year. Near- record inventory levels suggest sellers will continue to feel pressure to lower prices in coming months.
“Buyers have the upper hand, given the massive overhang of homes for sale,” Lehman Brothers Holdings Inc. senior economist Drew Matus said in a note to clients. “Since buyers generally expect prices to continue to fall, they will likely wait to purchase. We expect home prices to continue to fall.”
Economists forecast the gauge would decrease 4.2 percent, according to the median of 11 estimates in a Bloomberg News survey.
The group’s 10-city composite index, which has a longer history, dropped 5 percent in the 12 months ended in August, the most since June 1991.
Compared with July, home prices in the 20-city index fell 0.7 percent after a 0.4 percent decline the month before. The figures aren’t seasonally adjusted, so economists prefer to focus on the year-over-year change.
“The fall in home prices is showing no real signs of a slowdown or turnaround,” said Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, in a statement. “There is really no positive news in today’s report.”
Data through August 2007, released today by Standard & Poor’s for its S&P/Case-Shiller® Home Price Indices, the leading measure of U.S. home prices, show further declines in the prices of existing single family homes across the United States, marking the 8th consecutive month of negative annual returns and the 21st consecutive month of decelerating returns.
“At both the national and metro area levels, the fall in home prices is showing no real signs of a slowdown or turnaround,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “Year-over-year and monthly price returns are continuing to either move deeper into negative territory or are experiencing persistent diminishing returns. There is really no positive news in today’s report, as most of the metro areas are showing declining or vanishing returns on both an annual and monthly basis. Only two metro areas – Denver and Detroit – showed improvement in their annual returns and even those were reports of slightly less negative numbers.”
The S&P/Case Shiller Home Price Indicies are due out at 9:00am this morning. These indicies are quickly becoming the standard for measuring home price movement in the areas that are tracked. S&P/Case Shiller seems to be a bit more respected than the Realtor data, mainly because it is provided by an unbiased third-party, Standard and Poors. Likewise, it is gaining share on OFHEO, due to the numerous limitations caused by the OFHEO methodology.
For those interested in the methodology behind the S&P/Case Shiller Home Price Indicies:
S&P/Case Shiller HPI Index Methodology
An executive review for those who don’t particularly care about the methodological details:
S&P/Case Shiller HPI Factsheet
The last S&P/Case Shiller HPI release on September 25th:
Summer Swoon Evident in the S&P/Case-Shiller® Home Price Indices
As well as the historical dataset:
September 25, 2007: Historical Values