House Prices Remain Weak in December

 

The Case-Shiller house price indexes are three month moving averages, with the December data reflecting sales in October and November. Due to the lagging nature of the data, the numbers may not fully reflect the latest improvement in sales in December.
Courtesy of NAHB

The release of the Standard and Poor’s Case-Shiller Home Price Index (HPI) for December and fourth quarter of 2010 indicates that house prices continued to drift down, despite the improving economic environment. National House Price Index declined by 3.9 percent in the fourth quarter and is down 4.1 percent from the fourth quarter 2009.  The Composite 10 and the Composite 20 posted month over month declines of 0.9 percent and 1 percent, respectively in December. On a year-over-year basis the CS10 and CS20 are down 1.2 percent and 2.4 percent, respectively.

The National Home Price Index declined for the second consecutive quarter, but it remains 1 percent above its first quarter 2009 low. Similarly, the Case-Shiller composite indexes declined steadily in the second half of 2010, but both indexes remain above their April 2009 low–the CS10 3.9 percent and the CS20 2.3 percent above their low.

The situation is mixed across the metro areas. Nine markets remain above their 2009 lows, while eleven have slipped to their lowest level since house prices peaked in 2006 and 2007.  The strongest markets include San Francisco (15.4 percent above their 2009 low), Washington DC (12.2 percent), San Diego (10.1 percent), Minneapolis (7.8 percent) and Los Angeles (7.4 percent), with Boston (4.6 percent), Denver (3.2 percent), Cleveland (3 percent) and Dallas (2.1 percent) also above their 2009 low.

Home sales were weak in the second half of 2010, which had a negative impact on house prices.  However, home sales turned the corner in December, with both new home sales and existing home sales experiencing a strong bounce, up 18 percent and 12 percent respectively.

The rate of growth will ease, but driven by a steady decline in the rate of foreclosures started and the improving employment situation, we expect home sales to continue to rise through 2011. The increasing home sales will bolster house prices and stem any further declines.

- Courtesy of NAHB