S&P: July Home Prices Down -13.3% YOY, 31st Declining Month, 6th Month of Less Decline

The S&P Case Shiller July 2009 report of existing home salesshowed year-over-year -13.3% price declines averaged across 20 major metropolitan areas (see table below). Notable declines for the year-over-year period were Las Vegas -31.4%, Phoenix -28.5%, and Miami -21.2%. Notably, San Francisco’s YOY decline decreased from -22.0% to -17.9% from June to July. From June to July, all 20 cities in the composite showed lesser rates of decline. Both the 10 and 20 metro area Composites have been in year-over-year decline for 31 consecutive months, and home prices are at similar levels to what they were in mid-2003. The positive news is that July is the sixth consecutive month that the year-over-year rate of decline has decreased.

Case Shiller July 2009 Home Price Index

The index tracks existing single family homes, and is a credible pricing barometer for broad market analysis because it excludes condos and new construction. Condos can have more volatile pricing, and new construction pricing can be artificially set by builders, especially in times of distress when discounts an incentives can skew pricing. S&P refers to 10 and 20 “City” Composites, but these are actually metropolitan regional areas, not just cities. For example, where the city says San Francisco, this isn’t just San Francisco, but rather the entire 9 county Bay Area region.

FULL TEXT FROM PRESS RELEASE
Data through July 2009, 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, although still negative, the annual rate of decline of the 10-City and 20-City Composites improved compared to last month’s reading. This marks approximately six months of improved readings in these statistics, beginning in early 2009.

The 10-City and 20-City Composites declined 12.8% and 13.3%, respectively, in July compared to the same month last year. All 20 metro areas also showed an improvement in the annual rates of decline, with July’s readings compared to June.

“The rate of annual decline in home price values continues to decelerate and we now seem to be witnessing some sustained monthly increases across many of the markets” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “The two composites and all metro areas are showing an improvement in the annual rates of return, as seen through a moderation in their annual declines.

Looking at the monthly data, the 10-City and 20-City Composites and 18 of the 20 metros areas increased in July. In addition, both Composites and 13 of the MSA have had at least three consecutive months of positive prints. These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer’s Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures.”

The chart above shows the index levels for the 10-City and 20-City Composite Indices. As of July 2009, average home prices across the United States are at similar levels to where they were in the autumn of 2003, From the peak in the second quarter of 2006, the 10-City Composite is down 33.5% and the 20- City Composite is down 32.6%.

In terms of annual declines, despite the overall improvement, all metro areas and the two composites remain in negative territory, with 14 of the 20 metro areas and both composites in double digits. On the positive side, Cleveland, Dallas and Denver are nearing in on positive territory with July readings of -1.3%, -1.6% and -2.9%, respectively. Las Vegas posted its lowest index level in July since its peak in August of 2006, resulting in a 54.8% peak to trough decline.

In the monthly data, only Seattle and Las Vegas showed monthly declines. Thirteen of the 20 metro areas had three or more consecutive positive returns; and 16 MSAs and the two composites reported monthly returns greater than +1.0%.

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 22 years of history for these data series is available, and can be accessed in full by going to www.homeprice.standardandpoors.com.