Decline in Home Prices Slows

The decline in home prices slowed for the third straight month in April, according to a leading market surveys, suggesting that while the housing market has not turned around, it may finally be firming up.

The monthly Standard and Poor's/Case-Shilling Home Prices Indices reported that April's monthly decline in seasonally adjusted housing prices was the smallest in two years. On an annual basis, prices in the Indices' 10- and 20- city home price surveys were down about 18 percent compared to April 2008, compared to an annual decline of 18.7 percent in March. The two indices posted their sharpest declines on record, of 19.4 and 19.0 percent, respectively, in January 2009.

The stock market rallied at its opening today on news of the report, but fell shortly thereafter upon release of a report showing diminished consumer confidence in June.

"While one month's data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions," said David Blitzer, Chairman of the Index Committee at Standard & Poor's. "We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here."

Blitzer noted that of the 20 metro areas surveyed, all except for Charlotte, N.C., showed an improvement in their monthly returns over March, with either smaller declines or greater increases. Prices increased from March to April in eight of the 20 metropolitan areas, led by Dallas, Denver and Cleveland, which posted gains of 1.7 percent, 1.5 percent and 1.2 percent, respectively.

The slowing pace of annual declines is considered significant because it represents a reversal of a trend that has persisted since the housing market began its decline. Plotted on a graph, the annual rate of change in housing prices has been falling every month since early 2006. The slowing of that decline after January 2009 represents the first uptick on that chart in nearly three years.

According to the S&P survey, average U.S. home prices are now at about the same level they were in mid-2003, although there is considerable variation from market to market. Communities such as Dallas, Cleveland, Charlotte and Denver have posted relatively minor declines over the past three years, about 10 percent total, while other areas, including Miami, San Francisco, Los Angeles and Detroit have all posted declines in excess of 40 percent during that same period, while home values in the Phoenix metropolitan region have dropped an astonishing 54 percent, the worst of any of the 20 regions in the survey.