Wednesday, 26 December 2007

Case-Shiller Home Price Declines Accelerate

Noone expected House Prices to be good in October, however they may not have expected them to be quite as bad as the latest Case-Shiller Home Price Index reading suggests. From Standard & Poors:

Data through October 2007, released today by Standard & Poor’s for its S&P/Case-Shiller® Home Price Indices, the leading measure of U.S. home prices, show broadbased declines in the prices of existing single family homes across the United States, marking the 10th consecutive month of negative annual returns and the 23rd consecutive month of decelerating returns.

The chart above depicts the annual returns of the 10-City Composite and the 20-City Composite Indices. The 10-City Composite’s annual decline of 6.7% is a record low. The previous largest decline on record was 6.3% recorded in April 1991. In October, the 20-City Composite recorded an annual decline of 6.1%.

“No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “Not only did the 10-City Composite post a record low in its annual growth rate, but 11 of the 20 metro areas did the same.

If you look at the monthly figures, every MSA went down in both October and September. Eleven of the 20 MSAs, in addition to the two composites, recorded their single largest monthly decline on record in October. For both the 10-City and 20-City composites this was a decline of 1.4% over September”

The decline in the 10 city composite index is the worst ever recorded. November represents the second month on month decline for every single city in the index. Year over year price declines bottomed out at -6.3% in1991. I suspect they are not near a bottom in year over year declines just yet as the biggest housing bubble in history continues to unwind.