Case-Shiller Home Price index shows a 17% fall

The S&P/Case-Shiller® Home Price Indices were released yesterday. Unfortunately, I was away all day and could not post. The indices showed a further decline in home prices in the United States through September 2008 (the data most recently available). In the year to September, prices dropped 17.4% for the Composite-10 index and 18.6% for the Composite-20 index versus 17.7% and 16.6% respectively in August.

Among the twenty cities tracked in the index, the ones registering the largest falls from the peak are – Phoenix (-38.5%), Los Angeles (-32.5%), San Diego (-34.4%), San Francisco (-33.4%), Miami (-36.4%) and Las Vegas (-37.6%).  All other cities have seen falls less than 30% with the bestmarket being Dallas that has only seen a 3.6% fall from the peak.

As I said last month, I am out of step with the increasingly pessimistic punderati because I believe that housing declines are becoming less pronounced and that more than half of the declines have been registered. I am not bullish on housing but I do think that some markets like Detroit and Cleveland may be bottoming.

Nevertheless, the Composite-10 index shows a 27.6% decline peak-to-trough and the Composite-20 index shows a decline of 25.1% peak-to-trough, both figures adjusted for inflation. These figures are both 0.1% better than last month because of declining inflation indices.  But, it demonstrates the severe nature and breadth of house price falls to date.

Unless we see a real Armageddon scenario, we are easily more than halfway through house price declines in the U.S.