October House Price Index Down

Standard & Poor's Case-Shiller house price index (HPI) continued to decline in October, with the Composite 20 index (CS20) falling 1.3 percent and the Composite 10 (CS10) index down 1.2 percent. Courtesy of NAHB

Case-Shiller house price index declined for the third consecutive month. Year-over-year there has been little change in the index, with the CS10 up 0.2 percent and the CS20 is down 0.8 percent relative to October 2009.

The recent decline in the indexes are a reflection of the period covered. The Case-Shiller HPIs are a three-month moving average of house prices, with the October reading including sales from August, September and October. Therefore, the index continues to reflect softening in house prices due to the weak housing demand in third quarter.

The press release announcing the October HPI paints a gloomy picture. Both composites were down in October over September, while six markets - Atlanta, Charlotte, Miami, Portland (Ore.), Seattle and Tampa - hit their lowest levels since home prices started to fall in 2006 and 2007.

The high volatility in house prices over the past 20 months is a side effect of the government assistance programs that have attempted to stem the decline in house prices and assist the recovery in the housing demand.

The introduction and subsequent expiration of homebuyer tax credits provided a short boost to housing demand followed by a downturn. Overall, the tax credits were effective in stopping the free fall in house prices. Despite the volatility in the HPI over the past 20 months, the credits have led to an increase in overall house prices, with the CS20 index up 4 percent and the CS10 up 6 percent from their low in April 2009.

- Courtesy of NAHB