Home prices remain in a downtrend, a sign of sluggish recovery.
U.S. home prices in some cities are the lowest they’ve been in more than a decade, and others continue to test their 2009 lows in what some economists say has the makings of a potential double-dip in housing, according to the latest S&P/Case-Shiller Home Price Index report.
High unemployment, sluggish property sales and housing starts, as well as continuing foreclosures, continue to weigh on the U.S. housing market as it struggles to stage a sustainable recovery after the market crash of 2008-2009. Prices in 19 of the 20 cities surveyed fell in February.
The report for February, released today, revealed that home prices nationally are edging closer to testing their 2009 lows, with both the 10-City and 20-City Composites in the data series down on the year, the latter being “within a hair’s breadth of a double dip,” S&P’s Chairman of the Index Committee David Blitzer said in the report.
Housing was at the center of the credit crisis that triggered the worst U.S. economic downturn since the 1930s, and remains a crucial aspect of lasting recovery. The home market was temporarily buoyed by a government tax-credit program aimed at boosting demand. But strength faded when the incentives expired last summer.
“There is very little, if any, good news about housing,” Blitzer said. “Prices continue to weaken, while trends in sales and construction are disappointing. Ten of the 11 (cities) that recorded index lows in January fell further in February.”
More than half of the cities surveyed, as well as both composites, have posted consistent monthly price declines for more than six months now.
“Recent data on existing-home sales, housing starts, foreclosure activity and employment confirm that we are still in a slow recovery,” Blitzer said.
In February, the 10-City and 20-City composites dropped 1.1 percent month-on-month from January levels, and are now more than 32 percent below their mid-2006 peaks. All in all, home prices nationally are back to where they were in the summer of 2003.
Nineteen of the 20 cities surveyed saw month-on-month price declines in February, and 14 of them have seen declines for at least six straight months.
Detroit was the only city to see a positive reading in February compared with the previous month, gaining 1 percent on the month. But even those small gains were tainted by the fact that home values in Detroit are 30 percent below their 2000 levels.
“Atlanta, Cleveland and Las Vegas joined Detroit as cities with home prices below their 2000 levels,” Blitzer noted. “And Phoenix is barely above its January 2000 level after a new index low.”
Washington, D.C., on the other hand, is the only city of the 20 surveyed to have sustained any gains year-on-year, although that city too has seen prices begin to soften in the past couple of months.