S&P/Case-Shiller: Home Prices End 2010 on Downtrend

by devteam February 22nd, 2011 | Share

The S&P/Case Shiller Home Price Indices, which track home pricesrnthroughout the U.S. on a two-month lag, declined 3.9 percent during the fourth quarter of 2010 onrntop of a 1.9 percent decline in Q3. Prices were 4.1 percent lower than onernyear earlier.  This represents the lowestrnannual growth rate since the third quarter of 2009 when prices were falling atrnan 8.6 percent annual rate and the sixth consecutive month of national home price depreciations.</p

S&P/Case-Shiller provides two monthly indices whichrntrack the price path of single family homes in a 10-City and a 20-City datarnbase.  Each index combines matched pricernpairs from sales of individual homes. rnThe National Housing Index tracks home value data for the nine U.S.rnCensus divisions and is calculated quarterly. rnAll indices are based on a value of 100 which represents home prices inrnJanuary 2000.  A current index value ofrn150 percent would translate to a 50 percent appreciation in price since thatrndate.  </p

The Chart below shows the levels of the U.S. National Home Price Index as well as its annualrnreturns.  After recovering slightly overrnseveral quarters from the trough that home prices reached in Q1 2009, thernNational Index has dropped nearly back to that level and now approximates homernprices in early 2003.</p


S&P/Case-Shiller provides its data in both seasonallyrnadjusted (SA) and non-seasonally adjusted form but recommends relying on thernlatter. </p

19 of 20 Metropolitan StatisticalrnAreas (MSA)  in the 20-City Index reported declines during in the November/Decemberrnperiod with Tampa down 2.6 percent; Detroit off 2.3 percent; and Seattlerndeclining 2.0 percent.  Only WashingtonrnDC showed an increase, a slight 0.3 percent. rnIn December, 11 MSAs fell to new index lows following their peaks inrn2006/2007.  For nine of these MSAs,rnAtlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, Seattle, Tampa, andrnPortland (OR) it was the second record setting month in a row; New York andrnPhoenix were newcomers to the list.   </p

David M. Blitzer, Chairman of the Index Committee atrnStandard and Poor’s said, “We ended 2010 with a weak report.  Unlike the 2006 to 2009 period when all citiesrnsaw prices move together, we see some differing stories around therncountry.  California is doing better withrngains from their low points in Los Angeles, San Diego and San Francisco.  At the other end is the Sun Belt – Las Vegas,rnMiami, Phoenix and Tampa.  All four madernnew lows in December.  Also seeingrnrenewed weakness are some cities that were among the last to reach their peaksrnincluding Atlanta, Charlotte, Portland OR and Seattle.”</p

Blitzer said that Cleveland and Las Vegas have joinedrnDetroit with average home prices below the January 2000 base period. </p


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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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