Home Price Indexes Not Completely Dismal For June

August 26, 2008

We'll take the good news where we can find it.


It looks like the worst may be over. It's not that we're predicting sunshine and lollipops in the future, but the S&P/Case-Shiller Home Price indexes seem to be showing a continued easing in their previously precipitous declines. After roughly 18 months of broad-based declines, things seemed to lighten for May, and June's reading was actually kind of ... upbeat.

Now don't go getting ideas - the 10-city composite is still down 17% for the 12 months ended June 30, with the 20-city composite down 15.9% for the same period - record declines yet again. But those same indexes were down just 0.6% and 0.5%, respectively, for the month of June. That's a big change from monthly declines that just a few months ago were nearing 3%. And the news is even better from individual cities.


Chart: S&P Case-Shiller Home Prices Indices 12 mos ending June 30 2008


Although all 20 cities had negative returns for the 12-month period, nine cities had positive returns for the month of June, up from seven in May. The best performer was Denver, up 1.5%, followed by Boston, up 1.2%, and Minneapolis, up 1.0%. According to S&P, while Boston and Denver have had positive monthly returns for three consecutive months, Charlotte and Dallas have had positive returns for four consecutive months.

The worst performer for June was Phoenix, which was down 2.6% for the month. San Francisco and Miami were down 1.8% and 1.7%, respectively.

Las Vegas, Miami and Phoenix remain the worst performers on an annual basis, down 28.6%, 28.3% and 27.9%, respectively. Charlotte was the best-performing city, down just 1.0%, while Dallas was down 3.2% and Denver was down 4.7%.

Meanwhile, the quarterly S&P/Case-Shiller U.S. National Home Price Index, covering the nine U.S. census divisions, had a record 15.4% decline from the second quarter of 2007 to the second quarter of 2008.


Table: quarterly S&P Case Shiller U.S. National Home Price Index

 Source: Standard & Poor's

"While there is no national turnaround in residential real estate prices, it is possible that we are seeing some regions struggling to come back, which has resulted in some moderation in price declines at the national level," said David M. Blitzer, chairman of the Index Committee at Standard & Poor's. While he said that the rate of home price decline might be slowing, Blitzer also noted that not only were all 20 cities showing negative annual returns, but seven were actually showing declines of more than 20%.

As of June, the 10-city composite is down 20.3% from its June 2006 high, and the 20-city composite is down 18.8% from its July 2006 peak.

While it's unclear whether this easing decline might morph into a turnaround for home prices, next month's reading will likely present a clearer picture.


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