Home Prices Dip, but Market Signals Improvement
Figures released Tuesday from Standard and Poor’s Case-Shiller Home Price Index, show the national rate of price declines slowing, while a federal estimate of the number of new home sales increased.
Although home prices have declined at record rates each year since 2006, the new Case-Shiller numbers show that the rate of decline for the 10-city and 20-city composite indexes were down .6 percent and .5 percent in June, respectively, compared to the 2 to 2.5 percent drop per month seen earlier in 2008, according to a Standard and Poor’s press release.
Home prices are still down considerably from 2007, with the national Case-Shiller Index showing a record 15.4 percent decline in prices from the second quarter of 2007 to 2008.
The average price of a new-home sold in July was $294,600, down 4.1 percent from a year ago. The median home price – where half sell for more and half for less – was $230,700, down 6.3 percent from last year.
The price of homes in the U.S. market peaked in summer 2006. The 10-city composite price has fallen 20.3 percent since then and the 20-city composite has fallen 18.8 percent. Las Vegas has the weakest market with an annual decline of 28.6 percent, according to the release.
“While there is no national turnaround in residential real estate prices, it is possible that we are seeing some regions struggling to come back, which has resulted in some moderation in price declines at the national level,” Chairman of Standard and Poor’s Index Committee said in the release.
According to the new Case-Shiller report, some major metropolitan areas actually saw an increase in home prices from May to June 2008. Atlanta, Boston, Cleveland and Denver, among others, saw price increases during that time period.
Meanwhile, the U.S. Census Bureau and the Department of Housing and Urban Development estimated that the seasonally adjusted annual rate for new home sales in July was 515,000, up 2.4 percent from the June estimate. The July estimate is 35.3 percent below the July 2007 estimate, according to a Department of Commerce press release.
The New York Times reported that some analysts see the numbers as a sign that the largest price declines could be in the past, despite the fact that the market still faces serious problems.
“Sales are probably not going to rebound any time soon because the mortgage conditions continue to get tighter,” Nigel Gault, chief domestic economist at research firm Global Insight, told the Times. “And prices, so much as we have so much excess supply out there, prices have still got to come down some more,” he added.