S&P: March Home Prices Down -18.7% YOY, 27 Consecutive Months of Decline
The S&P Case Shiller March 2009 report of existing home sales showed year-over-year -18.7% price declines averaged across 20 major metropolitan areas (see table below), but for the past two months, declines didn’t set new YOY records. However, there was a 19.1% decline from 1Q2008 to 1Q2009, which is the largest decline in the history of the series. Notable declines were Las Vegas -31.2%, Phoenix -36.0%, and San Francisco -30.1%. From February March as well as March 2008-2009, prices in all 20 cities in the composite were down. Both the 10 and 20 metro area Composites have been in year-over-year decline for 27 consecutive months, and home prices are at similar levels to what they were in 3Q2003. From the peak in the second quarter of 2006, average home prices are down 32.2%. A ray of hope: Nine of the 20 metro area Composites showed a slower pace of decline in March.
Case Shiller March 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
New York, May 26, 2009 – Data through March 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 the U.S. National Home Price Index continues to set record declines, a trend that began in late 2007 and prevailed throughout 2008.
The S&P/Case-Shiller U.S. National Home Price Index – which covers all nine U.S. census divisions – recorded a 19.1% decline in the 1st quarter of 2009 versus the 1st quarter of 2008, the largest decline in the serie’s 21-year history. The 10-City and 20-City Composites recorded annual declines of 18.6% and 18.7%, respectively. These are slight improvements from their returns reported for February.
“Declines in residential real estate continued at a steady pace into March,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “All 20 metro areas are still showing negative annual rates of change in average home prices with nine of the metro areas having record annual declines. Seventeen metro areas recorded a monthly decline in March, with Minneapolis, Detroit and New York posting record monthly declines. On a positive note, nine of MSAs are reporting a relative improvement in year-over-year returns and nine of the 20 metro areas saw an improvement in their monthly returns compared to February. Furthermore, this is the second month since October 2007 where the 10- and 20-City Composites did not post a record annual decline. Based on the March data, however, we see no evidence that that a recovery in home prices has begun.”
The chart above shows the index levels for the U.S. National Home Price Index, as well as its annual returns. As of March 2009, average home prices across the United States are at similar levels to what they were in the fourth quarter of 2002. From the peak in the second quarter of 2006, average home prices are down 32.2%.
Minneapolis had a record monthly decline of 6.1% in March. This represents the largest monthly decline of any metro area in the history of the indices. For March, Detroit and New York also reported their largest monthly declines, returning -4.9% and -2.5%, respectively. The performances of these two MSAs represent the extremes of the national boom/bust scenario. The New York index is still up 73.4% from January 2000, though down 19.7% from its June 2006 peak. The Detroit index is 29.0% lower than in January 2000. Detroit home prices are back to their mid-1995 levels.
In terms of annual declines, the three worst performing MSAs continue to be the same three from the Sunbelt, each reporting negative returns in excess of 30%. Phoenix was down 36.0%, Las Vegas declined 31.2% and San Francisco fell 30.1%. Denver, Dallas and Boston continue to fare the best in terms of annual declines down 5.5%, 5.6% and 8.0%, respectively.
Looking at the data from peak-thru-March 2009, Dallas has suffered the least, down 11.1% from its peak in June 2007; while Phoenix is down 53.0% from its peak in June of 2006. All of the 20 metro areas are in double digit declines from their peaks, with ten of the MSAs posting declines of greater than 30% and two of those – Phoenix and Las Vegas – in excess of 50%.