US house prices still sliding, but descent has slowed
House prices in the United States declined less in July than June, but the property market was still far from a sustained recovery, according to David Blitzer, chairman of the S&P/Case-Shiller index.
The index of property values in 20 cities fell 4.1% over the year, slightly better than the revised 4.4% drop in the 12 months to June.
The index has had negative house price growth for 13 consecutive months.
“We are still far from a sustained recovery,” Blitzer says.
The data “indicates that the housing market is still bottoming and has not turned around,” says Blitzer.
Eighteen of the 20 cities and both the 10-city and 20-city lists are showing that home prices are still below where they were a year ago.
The 10-city index composite is down 3.7% and the 20-city index is down 4.1% compared with July 2010.
“Continued increases in home prices through the end of the year and better annual results must materialise before we can confirm a housing market recovery,” Blitzer says.
As of July 2011, average home prices across the United States are back to the levels where they were in the summer of 2003.
Measured from the June/July 2006 peaks through July 2011, the peak-to-current declines for the 10-city composite and 20-city composite are -31% and -30.9%, respectively.
The peak-to-trough declines are -33.5% and -33.4%, respectively.
The 10-city composite hit its crisis low in April 2009, whereas the 20-city reached a more recent low in March 2011.
Other gauges tracking home prices, including CoreLogic and the Federal Housing Finance Agency, have also shown a slight monthly improvement in July over June.
The Case-Shiller measure is based on a three-month average, which means the July data were influenced by transactions in June and May. July’s year-to-year drop was the smallest since March.
Prices in the 20 cities rose 0.9% before adjusting for seasonal changes in July after climbing 1.2% in June.
Eighteen of the 20 cities in the index showed a year-over- year decline in July, led by a 9.1% drop in Minneapolis.
The only gainers were Detroit, which showed a 1.2% advance, and Washington, with a 0.3% increase.
Home sales remain in the doldrums with sales of new houses falling in August to a six-month low, figures from the Commerce Department show.
But purchases of previously owned homes rose to a five-month high, boosted by demand of low-priced, distressed houses, according to the National Association of Realtors.
Sales of existing US properties have averaged a 4.97 million annual pace this year, compared with the 7.25 million peak reached in September 2005.
CoreLogic recently reported that “shadow inventory” – distressed properties not yet on the market – declined to 1.6 million in July from 1.9 million a year earlier, 22% below its peak.
Investigations into bank foreclosure practices have led to delays in processing that may have helped stabilise prices in recent months.
But Bloomberg speculated values may soon resume their slide as the holdups dissipate, putting more houses on to the market and pushing back any recovery in the industry that precipitated the last recession.
“The enormous supply overhang of existing homes, particularly factoring in all those in foreclosure or soon to be, promises to keep pressure on prices for some time,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, said in a note to clients reported by Bloomberg.
