S&P/Case Shiller: U.S. Home Prices Fall for Sixth Straight Month

National home prices continued to fall during the fourth quarter of 2010 accordind to the latest data from the S&P/Case Shiller Home Price Indicies.

During the quarter, the National Index fell 4.1% versus the fourth quarter of 2009, which is the lowest annual growth rate since the third quarter of 2009, when prices were falling at an 8.6% annual rate said S&P.

As of December 2010, 18 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were down compared to December 2009. Both Los Angeles and San Francisco reported negative annual rates of return in December, leaving San Diego and Washington DC as the only two cities where home prices are increasing on a year-over-year basis, +1.7% and +4.1%, respectively.


The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.1% decline in the fourth quarter of 2010 over the fourth quarter of 2009. In December, the 10- and 20-City Composites posted annual rates of decline of 1.2% and 2.4%, respectively. Thirteen of the 20 MSAs and both monthly Composites saw their annual growth rates fall in December versus November.


Despite improvemnts in the overall economy, housing continues to drift lower and weaker said David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s.

“Unlike the 2006 to 2009 period when all cities saw prices move together, we see some differing stories around the country,” he said. “California is doing better with gains from their low points in Los Angeles, San Diego and San Francisco. At the other end is the Sun Belt – Las Vegas, Miami, Phoenix and Tampa. All four made new lows in December. Also seeing renewed weakness are some cities that were among the last to reach their peaks including Atlanta, Charlotte, Portland OR and Seattle, where news lows were also seen. Dallas, which peaked late, has so far stayed above its low marked in February 2009.”

“The 10- and 20-City Composite indices remain above their spring 2009 lows; however, 11 markets – Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices peaked in 2006 and 2007. We have seen more markets hit new lows in each of the past three months.”

“Looking deeper into the monthly data, 19 MSAs and both Composites were down in December over November. The only one which wasn’t was Washington DC, up 0.3%. With December 2010 index levels of 99.73 and 99.48, respectively, Cleveland and Las Vegas have the dubious distinction of average home prices now below their January 2000 levels. Detroit was the only market that was in that group prior to December”

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  • Today on CNBC, the godfather of MBSs was declaring that the current inventory of homes for sale plus the vacant and occupied foreclosed homes plus those homes in irreversible default in the shadow inventory represent a four year supply of homes at the current absorption rate. At least in the short run this corresponds to the article above and the recent home market outlook announced for home builders.

    Cash sales of homes are way up showing that investors, vultures, and bottom feeders are trolling and participating in the current home market. Unfortunately it seems home values could get still worse long before getting better.

    For the fourth straight month, HECM case number assignments are up; however, that is not the real story; this is the result of diligent searching for any silver lining in a storm. The significant story is there are four months left in this FHA case number assignment season (defined later) in this fiscal year and the assignments are still running over 4,500 behind last year.

    The assignment season in which most HECMs become endorsements by the fiscal year end, September 30, of each fiscal year is June 1 to May 31. So for the fiscal year ending September 30, 2011, the assignment season started on June 1, 2010 and will end this coming May 31, 2011. While not exactly accurate, it is commonly believed that it takes over 120 days for an endorsed HECM to go from receiving a FHA Case Number to actually becoming endorsed.

    At 259 total Savers endorsed, these numbers are looking better. While that is only 60% of the number of HECMs for purchase, we are just at the cusp of starting to see the expected Saver volume from two of the larger lenders reflected in the endorsement numbers. Considering that there was no Savers in the endorsement inventory held by HUD until long after October 1, 2010, it is very good to see this kind of volume already. It is over 1% of the total HECMs endorsed so far in this fiscal year. It would be great to see that total move up to 2% of the total HECMs endorsed by September 30, 2011. It will certainly not reach the 30% level by fiscal year end that some were predicting.

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