Case Shiller points to a grim U.S. housing market

This comes from S&P’s website (pdf):

Data through December 2008, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show that the prices of existing single family homes across the United States continue to set record declines, a trend that prevailed throughout all of 2007 and 2008.

The associated graph tells the full story though.

The chart above depicts the annual returns of the U.S. National Home Price, the 10-City Composite and the 20-City Composite Indices. The decline in the S&P/Case-Shiller U.S. National Home Price Index – which covers all nine U.S. census divisions – recorded an 18.2% decline in the 4th quarter of 2008 versus the 4th quarter of 2007, the largest in the series’ 21-year history. The 10-City and 20-City Composites also set new records, with annual declines of 19.2% and 18.5%, respectively.

“The broad downturn in the residential real estate market continues,” says David M. Blitzer, Chairman of the Index committee at Standard & Poor’s. “There are very few, if any, pockets of turnaround that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and eight of those MSA’s now with negative rates exceeding 20%. If one looks in detail at the annual return data, it can be seen that 13 of the 20 MSA’s and the two composites have been reporting consecutive record declines since December 2007. The monthly data follows a similar trend, with all of the metro areas reporting at least four consecutive months of negative returns.”

Now, I have been saying for a few months that I anticipated the pace of decline would slow in 2009 and that I believed we had seen more than half of the decline already. However, yet again, the December 2008 data reveal an across the board decline in prices, calling this view into question. Every single market is down from last month, with the Composite-20 off 27% from it’s high.

Nevertheless, I am still expecting average house price declines much less than 50%, so this would leave us already more than halfway down from the highs. Given that prices in the Composite-20 fell a massive 20% in 2008, I still anticipate a slowing in price declines for the coming year.


Nationally, Home Price Declines Closed Out 2008 with Record Lows According to the S&P/Case-Shiller Home Prices Indices (pdf) – S&P Website

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