Home Price Decline Moderates

Data through March 2012, released by Standard and Poor Indices for its S&P/CaseShiller Home Price Indices, showed all three headline composites ended the first quarter of 2012 at new post-crisis lows. The national composite fell by 2 percent in the first quarter of 2012 and was down 1.9 percent versus the first quarter of 2011. The 10- and 20-City Composites posted respective annual returns of -2.8 percent and -2.6 percent in March 2012. Month-over-month, their changes were minimal; average home prices in the 10-City Composite fell by 0.1 percent compared to February and the 20-City remained basically unchanged in March over February. However, with these latest data, all three composites still posted their lowest levels since the housing crisis began in mid-2006. 

In addition to the three composites, five cities—Atlanta, Chicago, Las Vegas, New York and Portland—also saw average home prices hit new lows. This is an improvement compared to the nine cities reported last month.

“While there has been improvement in some regions, housing prices have not turned,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “This month’s report saw all three composites and five cities hit new lows. However, with last month’s report nine cities hit new lows. Further, about half as many cities, seven, experienced falling prices this month compared to 16 last time.

“There are some better numbers: Only three cities—Atlanta, Chicago and Detroit—saw annual rates of change worsen in March," Blitzer continues. "The other 17 cities and both composites saw improvement in this statistic, even though most are still showing a negative trend. Moreover, there are now seven cities—Charlotte, Dallas, Denver, Detroit, Miami, Minneapolis and Phoenix—where the annual rates of change are positive. This is what we need for a sustained recovery; monthly increases coupled with improving annual rates of change. Once we see this on a broader level we will be able to say the market has turned around."

As of March 2012, average home prices across the United States are back to the levels where they were in late 2002 for the 20-City Composite and early 2003 levels for the 10-City Composite. Measured from their June/July 2006 peaks, the decline for both Composites is approximately 35 percent through March 2012.

For both Composites, March’s levels are new lows in the current housing cycle. In March 2012, 12 MSAs posted monthly gains, seven declined and one remained unchanged. Phoenix posted the largest annual rate of change, +6.1 percent, while home prices in Atlanta fell the most during the year, down 17.7 percent. Atlanta, Cleveland, Detroit and Las Vegas were the four cities where average home prices were below their January 2000 levels. With an index level of 102.77 Chicago is not far behind.

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