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Single-Family Home Prices Rise In May

Home values at mid-2003 levels

By Mark Huffman
ConsumerAffairs.com

July 28, 2009

The numbers were tracked in the latest Standard & Poor's/Case Shiller home price index.

Still, there are a number of skeptics, who point out that a one-month change does not necessarily signal a bottom. The index, in fact, shows that measured year over year, home prices are still falling.

However, the annual rate of decline of the 10-City and 20-City Composites improved for the fourth consecutive month in 2009. The 10-City and 20-City Composites declined 16.8 percent and 17.1 percent, respectively, in May compared to the same month last year.

These values are improvements over April's data, which show annual declines of 18.0 percent and 18.1 percent, respectively. After 16 consecutive months of record annual declines, beginning in October 2007 and ending in January 2009, the indices have now shown four consecutive months of improvement in annual returns.

"The pace of descent in home price values appears to be slowing" said David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "There is a clear inflection point in the year-over-year data, due to four consecutive months of improved rates of return, after the steep decline that began in the fall of 2005."

In addition to the 10-City and 20-City Composites, 17 of the 20 metro areas also saw improvement in their annual returns compared to those of April, according to the index. In terms of the monthly data, 13 of the 20 metro areas reported positive returns; and the 10-City and 20-City Composites reported positive returns for the first time since the summer of 2006.

"To put it in perspective, these are the first time we have seen broad increases in home prices in 34 months," Blitzer said. "This could be an indication that home price declines are finally stabilizing."

That said, Blitzer notes that on a year-over-year basis home prices are still down about 17 percent on average across all metro areas.

"We likely do have a way to go before we see sustained home price appreciation," he said.

As of May 2009, average home prices across the United States are at similar levels to where they were in the middle of 2003, indicating that the three years of appreciation that occurred from 2003-2006 were all given back in the following three years. From the peak in the second quarter of 2006, the 10-City Composite is down 33.3 percent and the 20-City Composite is down 32.3 percent.

In terms of annual declines, the numbers remain relatively somber with all metro areas and the two composites in negative territory, and 16 out of the 20 metro areas are reporting double digit declines.

Las Vegas, Los Angeles, Miami, Phoenix, Seattle and Tampa posted their lowest index levels in May since their respective peaks. From peak to trough Phoenix and Las Vegas are the worst off, down 54.5 percent and 53.4 percent, respectively. More upbeat news is seen in the monthly data; Dallas and Denver have reported three consecutive months of positive returns. Atlanta, Boston, Cleveland, San Francisco and Washington D.C. each reported two consecutive months of positive returns. Eight of the 13 MSAs reporting positive monthly returns for May were greater than +1.0 percent.

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