Home Prices Remain Flat: Case-Shiller

By:
Kirk Haverkamp | Tue, 12/29/2009

Raw U.S. home prices were unchanged in October, but posted a moderate increase on a seasonally adjusted basis, according to a leading market survey released today.

Average U.S. home prices remained flat in October, according to the monthly Standard & Poor’s/Case Shiller survey of 20 major metropolitan areas, ending a streak of four consecutive monthly increases. On a seasonally adjusted basis, however, prices posted a 0.4 percent gain and the survey’s annual rate of decline improved for the ninth month in a row.
 
“The turn-around in home prices seen in the spring and summer has faded with only seven of the 20 cities seeing month-to-month gains, although all 20 continue to show improvements on a year-over-year basis,” said David Blitzer, chairman of the Index Committee at Standard & Poor’s. “All in all, this report should be described as flat.”
 
Blitzer said that, coming after several months of gains, the October figures may raise concerns that home prices are about to start falling again. However, he noted that the one previous time housing prices did a “double dip,” in the early 1980s, the Federal Reserve had made several dramatic policy reversals, in contrast to the current stable policies.
 
He also noted that sales of existing homes remain strong, working off excess inventory, although concerns remain that the market could be swamped by a wave of foreclosures hitting around the time that a number of government programs designed to support the market expire in early 2010.
 
Overall, home prices in the 20-city survey were down 7.3 percent since the same month one year earlier. That figure has been declining steadily over the past 9 months, after peaking around 19 percent, and is considered a more reliable indicator of long-term trends than month-to-month data. Overall, average prices across the U.S. were at about the same level they were in late 2003.
 
Among individual metropolitan areas, several cities hard-hit by the decline in housing values have been reporting steady gains, with the San Francisco area showing seven consecutive months of monthly increases, San Diego up six in a row and Los Angeles and Phoenix showing increases for five straight months.
 
One area that continues to be hard-hit, however, is the Las Vegas metropolitan region, where prices have declined for 38 straight months and are now 55.4 percent below their 2006 peak.

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