Tuesday, August 28, 2007

The Case-Shiller Home Price Index Down in July

It looks like along with declining home sales there are continuing price declines as well. There are some quotes in the Market Watch article below that are interesting. Also the original press release from S&P has some interesting tables and graphs.

U.S. home prices fell at a faster rate in the second quarter, down 3.2% compared with the same period in 2006, Standard & Poor's reported Tuesday.

It marked the largest year-over-year decline ever recorded in the 20-year history of the Case-Shiller home price index.

A year ago, home prices were rising at a 7.5% pace nationally.

"The pullback in the U.S. residential real-estate market is showing no signs of slowing down," said Robert Shiller, chief economist at MacroMarkets LLC, which computes the price index for S&P.
In an interview with MarketWatch, Shiller noted that the figures were for activity ending in June -- well before the more recent blowup in the mortgage markets.

"This slow-burn downswing probably has a long way to go," wrote Charles Dumas, an economist for London's Lombard Street Research. "The backlog of unsold homes has reached a level at which buyers are likely to get nasty, insisting on deep price cuts. As repossessed homes come on the market over the next 18 months, downward pressure on home prices and whole neighbourhoods will intensify." (my emphasis)

"We are fast approaching the rate of price decline seen at the end of the 1990-91 recession, and the odds strongly favor blowing past this mark in coming months," wrote Joshua Shapiro, chief economist for MFR Inc. "With supply overhang growing and mortgage financing tougher to obtain, home prices are going to soften considerably further in the quarters ahead."

The last time prices fell so much, it took more than eight years for home prices to return to their peak level.