The Pace of the Decline in Residential Real Estate Prices Slowed in February

New York, April 28, 2009 – Data through February 2009, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, shows continued broad based declines in the prices of existing single family homes across the United States, with 10 of 20 metro areas showing record rates of annual decline, and 15 reporting declines in excess of 10% versus February 2008. For the first time in 16 months, however, the annual decline of the 10-City and 20-City composites did not set a new record.

The chart above depicts the annual returns of the 10-City Composite and the 20-City Composite Home Price Indices. The 10-City and 20-City Composites recorded annual declines of 18.8% and 18.6%, respectively. This is a slight improvement from their returns reported for January, where they fell by 19.4% and 19.0%, respectively.

“While the declines in the residential real estate continued into February, we witnessed some deceleration in the rate of decline in some of the markets,” says David. M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “All 20 metro areas recorded a monthly decline in February, but 16 of the 20 areas saw in improvement in their monthly returns compared to January. Nine of the 20 metro areas showed improvement in their annual returns compared to their returns in January. Furthermore, this is the first month since October 2007 where the 10- and 20-City Composites did not post a record annual decline. We will certainly need a few more months of data before we can determine if home prices are finally turning around.”

The chart above shows the index levels for the 10-City and 20-City composite indices. As of February 2009, average home prices across the United States are at similar levels to where they were in the third quarter of 2003. From the peak in mid 2006, the 10-City Composite is down 31.6% and the 20-City Composite is down 30.7%.

All 20 metro areas reported negative monthly and annual rates of change in average home prices in February. In January’s report, seven metro areas and the 20-City Composite posted record monthly declines. In February, Cleveland was the only metro area having a record monthly decline, returning -5.0%. Cleveland, Charlotte, New York and Washington were the only MSA’s showing larger declines in home prices in February compared to January’s report.
In terms of annual declines, the three worst performing cities continue to be from the Sunbelt, each reporting negative returns in excess of 30%. Phoenix was down 35.2%, Las Vegas declined 31.7% and San Francisco fell 31.0%. Dallas, Denver and Boston faired the best in terms of annual declines down 4.5%, 5.7% and 7.2%, respectively. Dallas also had the distinction of being the best performer for the month, returning -0.3%

Looking at the data from peak-thru-February 2009, Dallas has suffered the least, down 11.1% from its peak in June 2007; while Phoenix is down 50.8% from its peak June of 2006. The rates of decline from the respective peak of each market are evidence of how much each market has given back from the gains earned in the past 10-15 years. All of the 20 metro areas are in double digit declines from their peaks, with ten of the MSA’s posting declines of greater than 30% and seven of those – Detroit, Las Vegas, Los Angeles, Miami, Phoenix, San Francisco and San Diego – in excess of 40%.

The Santa Barbara South Coast County from Carpinteria thru Goleta is in decline but typically not as bad as many areas. A four year average from 2005 thru 2008 for the 1st quarter shows a 29% decline in median sales price, compared to the first quarter of 2009 and a corresponding 28% decline.

Source: Standard & Poor's & Fiserv

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Builder Confidence Rises Five Points to Highest Level Since Oct. 2008

Builder confidence in the market for newly built, single-family homes rose five points in April to the highest level since October 2008, according to the most recent National Association of Home Builders/Wells Fargo Housing Market Index (HMI) report. It was the largest one-month increase recorded since May of 2003, and brings the HMI to 14, out of single digit territory for the first time in six months. Every component of the HMI reflected the boost, with the biggest gain recorded for sales expectations in the next six months, according to the report.

“This is a very encouraging sign that we are at or near the bottom of the current housing depression,” said NAHB Chief Economist David Crowe. “With the prime home buying season now underway, builders report that more buyers are responding to the pull of much-improved affordability measures, including low home prices, extremely favorable mortgage rates, and the introduction of the $8,000 first-time home buyer tax credit.”

Each of the HMI’s component indexes recorded substantial gains in April, with a 10-point increase in the component gauging builder sales expectations for the next six months, bringing that index to 25. The component gauging current sales conditions and the component gauging traffic of prospective buyers each rose five points, to 13 and 14, respectively, according to the report.