Case-Shiller: Housing Recovery Elusive

April 24, 2012

U.S. housing limps along, raising questions about whether a bottom is in.

U.S. home prices continued their slow downward trend, sliding again in February after ending last year at their lowest levels since the housing crisis began in mid-2006. The latest results put in question whether the market is forging a bottom, the latest S&P/Case Shiller report showed.

Both the 10-City and 20-City Composite indexes posted month-on-month declines in February of 0.8 percent. The benchmarks now sit at new post-crisis lows. The data showed that home values across the U.S. are back to levels not seen in a decade.

Still, a number of encouraging economic indicators such as an improving job market and slowly growing demand for homes loom as factors that some hope should start to help underpin housing values, even if consumer confidence remains low for now.

A clear recovery in housing is deemed crucial for a full-fledged economic recovery in the U.S. after the credit crisis of 2008 sent housing as well as the financial markets sharply lower. U.S. housing was at the center of that crisis, and much of the developed world remains mired in slow, debt-constrained, growth.

“While there might be pieces of good news in this report, such as some improvement in many annual rates of return, February 2012 data confirm that, broadly speaking, home prices continued to decline in the early months of the year,” David Blitzer, chairman of the S&P Indices’ index committee, said in the report.

Some 16 cities of the 20 surveyed saw home prices drop in February from January levels, with nine of them forging new cycle lows.

At the bottom is Atlanta, which continues to lead with double-digit losses on an annual basis. Home prices there were 17.3 percent lower in February than they were a year ago—the city’s lowest year-on-year comparison in the 20-year history of the index.

Atlanta has seen home values drop on a month-to-month basis for seven consecutive months.

But on the flip side, there are cities like Phoenix.

The Southwest city has seen two consecutive months of positive annual rates and five straight months of month-on-month gains. Home values in Phoenix are now 3.3 percent higher than they were a year ago.

Bright Spots In Annual Numbers

The 10-City and 20-City composites in February saw year-on-year declines of 3.6 percent and 3.5 percent, respectively, numbers that showed a slight improvement from year-on-year declines just a month earlier.

What’s more, 15 of the 20 cities surveyed also saw their annual rates of decline moderate in February, while Washington, D.C.’s home prices remained unchanged on a year-on-year basis.

Detroit, Denver, Miami, Minneapolis and Phoenix even managed to get their year-on-year numbers out of the red, with Phoenix leading in annual gains at 3.3 percent.

But for perspective’s sake, it’s worth noting that home values in Phoenix remain 54.2 percent lower than they were precrisis, the report showed.

All in all, home values across the U.S. remain 35 percent below their peak levels seen in mid-2006.



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