Case Shiller: US Housing Slumping

February 22, 2011

The U.S. housing sector is looking more and more like it's back in a slump.

U.S. home values slid about 4 percent in the last quarter of 2010 compared with the previous year, the worst performance since mid-2009, the latest S&P/Case-Shiller Home Price Index showed.

The December Case-Shiller report released today showed that home prices are hovering around their 2009 trough in most regions. In 11 of the 20 cities surveyed, prices have even forged new lows in a trend that has many analysts suggesting more downside is still to come.

“We ended 2010 with a weak report,” David Blitzer, the chairman of S&P’s index committee, said in the report. “Despite improvements in the overall economy, housing continues to drift lower and weaker.”

The U.S. housing market was at the center of the credit crisis that triggered the worst economic downturn the U.S. has seen since the 1930s. The latest Case-Shiller data adds fodder to concerns that U.S. economic growth is still wavering and that the global economic recovery remains on shaky ground amid persistent unemployment and, more recently, rising oil prices.

Both monthly composite indexes showed that home values dropped last year compared with 2009. What’s more, the number of cities forging new lows since their 2006-2007 peaks has increased in each of the past three months.

“Unlike the 2006-to-2009 period when all cities saw prices move together, we see some differing stories around the country,” Blitzer added. “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.”


For both the 10- and the 20-City composites, December marked the seventh straight month that values moderated from their previous year’s levels. They are now more than 30 percent below their mid-2006 highs, with average home prices across the country back to levels not seen since the beginning of 2003.

“Cleveland and Las Vegas have the dubious distinction of average home prices now below their January 2000 levels,” Blitzer noted. “Detroit was the only market that was in that group prior to December.”

On the other hand, Washington, D.C. was the only city in the survey that saw a slight improvement in December vs. November, posting a 0.3 percent gain on the month. All other 19 cities surveyed posted price declines on the month.

Washington, D.C.’s relative strength was attributed to the stable employment environment in that city thanks to the government. That’s an ace in the hole other areas don’t share, analysts said in a conference call following the release of the report.




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