As expected, the November’s S&P/Case-Shiller Home Price Index, released this morning, showed that home prices fell in November. The data is pretty grim: the index found decelerating growth in 17 of the 20 metropolitan statistical areas (MSAs) surveyed, and also found that the 10-city composite index was down 0.4 percent year-over-year, while the 20 city index was down 1.6 percent year-over-year. In 19 of 20 MSAs, home prices fell from October 2010 to November 2010, while prices fell in 16 of 20 MSAs on a year-over-year basis. The only cities showing positive growth over the past year were Los Angeles, San Diego, San Francisco, and Washington, D.C.
In eight markets (Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland, Seattle, and Tampa) home prices hit their lowest point since the market peaked in 2006. David M. Blitzer, Chairman of the Index Committee at S&P commented:
“With these numbers more analysts will be calling for a double-dip in home prices. Let’s take a moment to define a double-dip as seeing the 10- and 20-City Composites set new post peak lows. The series are now only 4.8% and 3.3% above their April 2009 lows, suggesting that a double-dip could be confirmed before Spring. Certainly eight cities setting new slows, and with the only positive news concentrated in southern California and Washington DC, the data point to weakness in homes prices”.
Myself (and many, many others) have predicted that home prices will decline for some time now. Not to beat a dead horse, but there is a massive supply of unsold housing in the United States (both in “visible” and “shadow” inventory), and not much demand for it as a result of poor consumer sentiment and continuing high unemployment. Unless something happens to change this equation, the pricing equilibrium point will shift until prices come in line with demand. Expect to see home prices continue to fall through at least the first half of 2011.
Bearing in mind that the S&P/Case-Shiller Index is a three month average (September, October, and November) that is delayed by two months, we could be well in the midst of a double dip right now.
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