August Home Prices in 20 U.S. Cities Rose Less Than Forecast
By Bob Willis - Oct 26, 2010
Home prices in 20 U.S. cities rose at a slower pace than forecast in August from a year earlier, reflecting slumping sales as the effects of a tax credit waned.
The S&P/Case-Shiller index of property values increased 1.7 percent from August 2009, the smallest year-over-year gain since February, the group said today in New York. The median forecast of 27 economists surveyed by Bloomberg News projected a 2.1 percent increase.
The end of a government credit worth as much as $8,000 precipitated a decrease in purchases that has yet to be reversed, keeping pressure on prices in coming months. At the same time, record foreclosures will dump more properties on the market and unemployment will restrain sales, indicating housing’s role in the economic recovery will be limited.
“Prices are declining in line with the widening imbalances between housing demand and supply, and we can expect this trend to continue,” said Michelle Meyer, a senior economist at Bank of America Merrill Lynch Global Research in New York, who correctly forecast the year-on-year change. “Home prices are likely to decline, probably on a choppy basis, through at least the middle of next year.”
Confidence among U.S. consumers rose in October from a seven-month low, another report showed, indicating the biggest part of the economy will take time to recover. The Conference Board’s confidence index increased to 50.2 from a revised 48.6 in September, while the proportion of people who said jobs were plentiful fell to the lowest level this year and income expectations were the weakest since April 2009.
Richmond-Area Manufacturing
Data from the Federal Reserve Bank of Richmond showed the regions factories recovered in October after contracting in September for the first time in eight months.
Stocks dropped after the reports, hurt by the home-price data and disappointing results from Texas Instruments Inc. and U.S. Steel Corp. The Standard & Poor’s 500 Index fell 0.3 percent to 1,181.57 at 10:08 a.m. in New York. Treasury securities also fell, pushing the yield on the benchmark 10-year note up to 2.60 percent from 2.56 percent late yesterday.
Bloomberg survey estimates ranged from a decrease of 0.6 percent to a gain of 3.5 percent. The 20-city price index is 28 percent below its peak in July 2006.
The gauge dropped 0.3 percent in August from the prior month after adjusting for seasonal variations, the second consecutive decrease and the biggest since April 2009. Unadjusted prices fell 0.2 percent from July.
‘Disappointing Report’
“A disappointing report,” David Blitzer, chairman on the index committee at S&P, said in a statement. “It does not seem that any of the markets are hanging on to the temporary momentum caused by the homebuyers’ tax credits.”
The year-over-year gauge provides better indications of trends in prices, the group has said. The price gauges were founded by economists Karl Case and Robert Shiller.
The government incentive gave housing a temporary lift in late 2009 and early this year, helping to stem a slide in prices. The initial tax break required contracts be signed by the end of November, pushing sales of existing homes to an almost three-year high 6.49 million annual pace that month, according to figures from the National Association of Realtors.
Credit’s Influence
Demand dropped for the next three months, only to be revived by the extension of the deadline to the end of April, which caused purchases to peak at a 5.79 million pace that month. After tumbling to a 3.84 million pace in July, the lowest since comparable records began in 1999, sales have climbed for the past two months, reaching a 4.53 million pace in September.
Fifteen of the 20 cities saw prices decline in August from the prior month, led by a 1.3 percent decline in Phoenix and a 1.1 percent drop in Dallas. Detroit led gainers with a 0.5 percent increase.
Prices dropped year-over-year in 12 of the 20 cities, two more than in July as Detroit and Miami went into negative territory. Las Vegas showed the biggest 12-month drop at 4.5 percent, while San Francisco had the biggest increase at 7.8 percent.
Foreclosure moratoria at JPMorgan Chase & Co. and other banks, along with government investigations into faulty paperwork, threaten to further delay a recovery as houses slated for repossession take longer to come to market.
The U.S. central bank and other regulators are “intensively” examining financial firms’ home-foreclosure practices and expect preliminary findings next month, Fed Chairman Ben S. Bernanke said yesterday at a housing conference in Arlington, Virginia.
Bernanke’s View
He said more than 20 percent of borrowers owed more than their home was worth. “With housing markets still weak, high levels of mortgage distress may well persist for some time to come,” he said.
Fed officials have signaled they may start another round of unconventional monetary easing at their next meeting Nov. 3 to try to spur the economic recovery.
Housing markets were “weak,” with “sluggish or declining” sales in many regions, the Fed said last week in its survey of regional districts for September and early October. “Respondents’ outlooks suggested sales and construction would remain subdued through year-end,” the Fed said.
Housing starts in September were 73 percent lower than the three-decade peak of 2.27 million reached in January 2006.
“We don’t think home prices are going to get much lower than what they are today,” Larry Sorsby , chief financial officer at Hovnanian Enterprises Inc., the largest homebuilder in New Jersey, said during an Oct. 7 conference call. “Unfortunately, fear is outweighing affordability today.”
S&P/Case-Shiller Table
============================================================
1-months 3-months 1-year 2-years 3-years
earlier earlier earlier earlier earlier
============================================================
US Composite-20 -0.21% 1.45% 1.70% -9.75% -24.72%
------------------------------------------------------------
Detroit 0.52% 4.68% -0.07% -22.61% -35.89%
Chicago 0.42% 3.94% -2.95% -15.23% -23.57%
Washington DC 0.26% 3.08% 4.84% -3.03% -18.22%
New York 0.17% 2.81% 0.08% -9.41% -15.40%
Las Vegas 0.12% -1.29% -4.49% -33.06% -53.41%
Denver -0.12% 0.26% -1.15% -3.06% -7.98%
Miami -0.28% 0.78% -0.97% -19.63% -42.23%
San Francisco -0.28% 0.47% 7.82% -5.67% -31.38%
Cleveland -0.29% 1.09% -0.39% -3.20% -9.60%
Minneapolis -0.29% 3.09% 2.89% -11.00% -23.16%
Boston -0.30% 1.54% 1.55% -2.69% -7.31%
Charlotte -0.37% 0.18% -3.41% -11.73% -14.19%
Los Angeles -0.41% 0.50% 5.36% -7.20% -31.98%
Tampa -0.51% -0.55% -4.11% -21.10% -35.41%
San Diego -0.62% 0.54% 6.95% -2.52% -27.67%
Seattle -0.75% -0.61% -2.41% -16.73% -24.05%
Atlanta -0.85% 1.13% -1.96% -12.25% -20.05%
Portland -0.88% -0.65% -2.29% -14.49% -20.96%
Dallas -1.13% -0.47% -1.72% -2.93% -5.46%
Phoenix -1.32% -1.95% 0.40% -24.85% -47.89%
============================================================
To contact the reporter on this story: Bob Willis in Washington at Bobwillis@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
Another article from the flipside perspective.
-Matt
-----------------------------------------------
http://www.bloomberg.com/news/2010-10-26/home-prices-in-20-u-s-cities-ro...
August Home Prices in 20 U.S. Cities Rose Less Than Forecast
By Bob Willis - Oct 26, 2010
Home prices in 20 U.S. cities rose at a slower pace than forecast in August from a year earlier, reflecting slumping sales as the effects of a tax credit waned.
The S&P/Case-Shiller index of property values increased 1.7 percent from August 2009, the smallest year-over-year gain since February, the group said today in New York. The median forecast of 27 economists surveyed by Bloomberg News projected a 2.1 percent increase.
The end of a government credit worth as much as $8,000 precipitated a decrease in purchases that has yet to be reversed, keeping pressure on prices in coming months. At the same time, record foreclosures will dump more properties on the market and unemployment will restrain sales, indicating housing’s role in the economic recovery will be limited.
“Prices are declining in line with the widening imbalances between housing demand and supply, and we can expect this trend to continue,” said Michelle Meyer, a senior economist at Bank of America Merrill Lynch Global Research in New York, who correctly forecast the year-on-year change. “Home prices are likely to decline, probably on a choppy basis, through at least the middle of next year.”
Confidence among U.S. consumers rose in October from a seven-month low, another report showed, indicating the biggest part of the economy will take time to recover. The Conference Board’s confidence index increased to 50.2 from a revised 48.6 in September, while the proportion of people who said jobs were plentiful fell to the lowest level this year and income expectations were the weakest since April 2009.
Richmond-Area Manufacturing
Data from the Federal Reserve Bank of Richmond showed the regions factories recovered in October after contracting in September for the first time in eight months.
Stocks dropped after the reports, hurt by the home-price data and disappointing results from Texas Instruments Inc. and U.S. Steel Corp. The Standard & Poor’s 500 Index fell 0.3 percent to 1,181.57 at 10:08 a.m. in New York. Treasury securities also fell, pushing the yield on the benchmark 10-year note up to 2.60 percent from 2.56 percent late yesterday.
Bloomberg survey estimates ranged from a decrease of 0.6 percent to a gain of 3.5 percent. The 20-city price index is 28 percent below its peak in July 2006.
The gauge dropped 0.3 percent in August from the prior month after adjusting for seasonal variations, the second consecutive decrease and the biggest since April 2009. Unadjusted prices fell 0.2 percent from July.
‘Disappointing Report’
“A disappointing report,” David Blitzer, chairman on the index committee at S&P, said in a statement. “It does not seem that any of the markets are hanging on to the temporary momentum caused by the homebuyers’ tax credits.”
The year-over-year gauge provides better indications of trends in prices, the group has said. The price gauges were founded by economists Karl Case and Robert Shiller.
The government incentive gave housing a temporary lift in late 2009 and early this year, helping to stem a slide in prices. The initial tax break required contracts be signed by the end of November, pushing sales of existing homes to an almost three-year high 6.49 million annual pace that month, according to figures from the National Association of Realtors.
Credit’s Influence
Demand dropped for the next three months, only to be revived by the extension of the deadline to the end of April, which caused purchases to peak at a 5.79 million pace that month. After tumbling to a 3.84 million pace in July, the lowest since comparable records began in 1999, sales have climbed for the past two months, reaching a 4.53 million pace in September.
Fifteen of the 20 cities saw prices decline in August from the prior month, led by a 1.3 percent decline in Phoenix and a 1.1 percent drop in Dallas. Detroit led gainers with a 0.5 percent increase.
Prices dropped year-over-year in 12 of the 20 cities, two more than in July as Detroit and Miami went into negative territory. Las Vegas showed the biggest 12-month drop at 4.5 percent, while San Francisco had the biggest increase at 7.8 percent.
Foreclosure moratoria at JPMorgan Chase & Co. and other banks, along with government investigations into faulty paperwork, threaten to further delay a recovery as houses slated for repossession take longer to come to market.
The U.S. central bank and other regulators are “intensively” examining financial firms’ home-foreclosure practices and expect preliminary findings next month, Fed Chairman Ben S. Bernanke said yesterday at a housing conference in Arlington, Virginia.
Bernanke’s View
He said more than 20 percent of borrowers owed more than their home was worth. “With housing markets still weak, high levels of mortgage distress may well persist for some time to come,” he said.
Fed officials have signaled they may start another round of unconventional monetary easing at their next meeting Nov. 3 to try to spur the economic recovery.
Housing markets were “weak,” with “sluggish or declining” sales in many regions, the Fed said last week in its survey of regional districts for September and early October. “Respondents’ outlooks suggested sales and construction would remain subdued through year-end,” the Fed said.
Housing starts in September were 73 percent lower than the three-decade peak of 2.27 million reached in January 2006.
“We don’t think home prices are going to get much lower than what they are today,” Larry Sorsby , chief financial officer at Hovnanian Enterprises Inc., the largest homebuilder in New Jersey, said during an Oct. 7 conference call. “Unfortunately, fear is outweighing affordability today.”
S&P/Case-Shiller Table
============================================================
1-months 3-months 1-year 2-years 3-years
earlier earlier earlier earlier earlier
============================================================
US Composite-20 -0.21% 1.45% 1.70% -9.75% -24.72%
------------------------------------------------------------
Detroit 0.52% 4.68% -0.07% -22.61% -35.89%
Chicago 0.42% 3.94% -2.95% -15.23% -23.57%
Washington DC 0.26% 3.08% 4.84% -3.03% -18.22%
New York 0.17% 2.81% 0.08% -9.41% -15.40%
Las Vegas 0.12% -1.29% -4.49% -33.06% -53.41%
Denver -0.12% 0.26% -1.15% -3.06% -7.98%
Miami -0.28% 0.78% -0.97% -19.63% -42.23%
San Francisco -0.28% 0.47% 7.82% -5.67% -31.38%
Cleveland -0.29% 1.09% -0.39% -3.20% -9.60%
Minneapolis -0.29% 3.09% 2.89% -11.00% -23.16%
Boston -0.30% 1.54% 1.55% -2.69% -7.31%
Charlotte -0.37% 0.18% -3.41% -11.73% -14.19%
Los Angeles -0.41% 0.50% 5.36% -7.20% -31.98%
Tampa -0.51% -0.55% -4.11% -21.10% -35.41%
San Diego -0.62% 0.54% 6.95% -2.52% -27.67%
Seattle -0.75% -0.61% -2.41% -16.73% -24.05%
Atlanta -0.85% 1.13% -1.96% -12.25% -20.05%
Portland -0.88% -0.65% -2.29% -14.49% -20.96%
Dallas -1.13% -0.47% -1.72% -2.93% -5.46%
Phoenix -1.32% -1.95% 0.40% -24.85% -47.89%
============================================================
To contact the reporter on this story: Bob Willis in Washington at Bobwillis@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net