This morning the S&P Case Shiller Home Price Index for August was published. It showed the beginnings of declines in home prices that were reported by Clear Capital and CoreLogic over the past week. The Case Shiller Home Price Index is a three month moving average that lags two months, so this iteration is actually measuring an average of June, July, and August. As a result, this effect of the first time home buyer tax credit is still present in this survey. According to the report:
Look out below.
“Data through August 2010, released today by Standard & Poor’s for its S&P Case Shiller Home Price Indices, the leading measure of U.S. home prices, show a deceleration in the annual growth rates in 17 of 20 MSAs and the 10- and 20- City Composites in August compared to what was reported for July 2010. The 10-City Composite was up 2.6% and the 20-City Composite was up 1.7 % from their levels in August 2009. Home prices decreased in 15 of the 20 MSAs and both Composites in August from their July levels.”
David Blitzer, Chairman of the Index Committee at S&P, commented:
“A disappointing report. Home prices broadly declined in August. Seventeen of the 20 cities and both Composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows.”
Blitzer also commented that any momentum from the homebuyer tax credits has evaporated, which was clear from the collapse in mortgage purchase applications in the past several months.
Quite frankly, this report is not surprising. For some time now we’ve been predicting that home prices would decline due to the glut of homes on the market (and in shadow inventory) and the dearth of demand following the expiration of the tax credits. We have now seen three reports over the last week show declines in home prices (the figures vary due to differences in methodology, but they are all pointing in the same direction). As long as these conditions remain, expect to see continued downward pressure on home values in the coming months.
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