Case-Shiller: Home Price Double-Dip Materializing

The January S&P/Case Shiller Home Price Indices, released by Standard & Poor's this morning, show further deceleration in the growth rates of home prices in most of the cities in the survey. 

The indices, which are billed by S&P as the leading measure of U.S. home prices, are constructed to track the price path of typical single-family homes in a number of metropolitan statistical areas (MSAs).  The study uses matched price pairs of individual houses to construct a 20-City Composite Index and a 10-City Composite Index which are updated monthly. The indices have a base value of 100 which was set in January 2000.  Thus a current index value of 150 indicates there has been a 50% appreciation since that date for a typical home in the subject market.  

The 10-City Composite was down 2.0 percent to 154.65 and the 20-City was 3.1 percent below the previous year's level at 140.86. Both composites were down about 1 percent from December figures. 

“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. “With this month’s data, we find the same 11 MSAs posting new recent index lows. The 10-City and 20-City Composites continue to decline month-over-month and have posted monthly declines for six consecutive months now."

Thirteen of the 20 MSAs and both of the Composites were below their January 2010 levels. Only two of the 20 cities included in the indices, Washington, DC and San Diego, California improved year over year; Washington was up 3.6 percent and San Diego inched up 0.1 percent; these same two MSAs were also the only ones to have positive annual rates all year.  Each of the other 18 cities either moved back into negative territory or never left since the start of the current housing downturn.

Many of the MSAs appear to be experiencing the double-dip in housing prices that has been predicted for some time.  Eleven of the cities posted new lows in relationship to their 2006-2007 peak levels.  All of these cities, Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland (OR), Seattle, and Tampa, had posted new lows in December as well.  The nation as a whole has slipped back to the price levels that existed in 2003.

The Phoenix MSA had the largest year-over-year decrease at 9.1 percent, returning that city to an index of 101.54, near a base year level.  Detroit with an index number of 66.02, the lowest of the 20 cities, was down 8.1 percent year-over-year followed by Portland, Oregon down 7.8 percent; Minneapolis,-7.6 percent; and Chicago, -7.5 percent.   

David M.  Blitzer, Chairman of the Index Committee at Standard & Poor's said "The data confirm what we have seen with recent housing starts and sales reports.  The housing market recession is not yet over, and none of the statistics are indicating nay form of sustained recovery.  At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing."

S&P/Case-Shiller reports data on both a seasonally adjusted and non-adjusted basis but recommends using the latter as being a more reliable indicator.  We have used only the non-adjusted data in compiling this summary.