Case-Shiller Says Pace of Home Price Declines Slowed in April

By: •

Contrary to expectations, the rapid decline of home prices showed signs of stabilization in April, according to the Case-Shiller Home Price Index, the most influential recorder of prices.

The 10-city composite index, which looks at ten major metropolitan areas across the nation, showed an annual price decline of 18.0% in April, compared with an -18.7% print in March.  The market consensus prior to release was 18.8%.

“For the past three months, the 10-City and 20-City Composites have recorded an improvement in annual returns,” the report stated. 

David M. Blitzer, Chairman of the index committee, was considerably more optimistic in his outlook than in last month’s release wherein he stated there was “no evidence that a recovery in home prices has begun.” 

In today’s release, Blitzer said, “While one month’s data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions.” He added: “We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here.”

The monthly price measure showed 13 of the 20 metro areas improving in their annual return compared to March. 

“The stock market bottomed in March and measures of consumer confidence have turned upward,” Blitzer added. “This report shows that these better spirits are also appearing in the housing market.”

From their peak before the bubble burst, prices are down an average of 32.6%, but the April figures mark “the slowest pace of price decline since September 2007,” noted TD strategist Millan Mulraine.

“On the whole, the report was encouraging in some dimensions, as it suggests that the accelerating pace of home price depreciation may perhaps be fast becoming a thing of the past,” Mulraine continued. “However, with the U.S labor market continuing to deteriorate and the overall backdrop for U.S. households remaining dire, a turnaround in the U.S. housing market may be some way off, even though the worst in the housing market correction may now be behind us.”

Other tidbits from the report:

  • The three worst performing metro areas are from the Sunbelt: Phoenix was down 35.3% in April, Las Vegas declined 32.2% and San Francisco fell 28.0%. 
  • The best performers in keeping prices stable are Denver (-4.9%), Dallas (-5.0%) and Boston (-7.7%)
  • Six cities posted record annual declines in April. They were Charlotte, Chicago, Cleveland, New York, Portland and Seattle.
Looking ahead, Deutsche Bank's chief U.S. economist Joseph LaVorgna said foreclosure-related sales will continue to drive down prices. He said: "The flood of 

foreclosure activity, which should be exacerbated by further upcreep in the unemployment rate, will weigh on home prices over the medium term."