By Peter Ricci
U.S. cities are reporting little change in prices in the latest Case-Shiller Home Price Indices, the monthly report by Standard & Poor’s (S&P) that is the leading measure of U.S. home prices.
The newest report, which surveys home prices for the third quarter, found prices from the second quarter were up nationally by just 0.1 percent, a marked change from the impressive 3.6 percent increase from the first quarter to the second.
Year-over-year prices fared even worse, dipping 3.9 percent from the third quarter of 2010. With the most recent declines, the nominal composite indices, which specifically look at 10 and 20 of the largest cities, have fallen to 2003 price levels.
David M. Blitzer, the chairman of the S&P Indices Index Committee, said that though the latest crop of data was a bit underwhelming, the worst of the price declines seem to have passed – though a consistent recovery remains elusive.
“Over the last year, home prices in most cities drifted lower,” Blitzer said. “The plunging collapse of prices seen in 2007 to 2009 seems to be behind us. Any chance for a sustained recovery will probably need a stronger economy.”
For the 10- and 20-City Composites, monthly prices were down 0.4 and 0.6 percent, while yearly prices from August 2010 are down 3.3 and 3.6 percent, respectively. Both indices have fallen 32.5 percent from their 2006 peak, and with the most recent declines, the 20-City Composite has now reached a new post-bubble low.
Prices were down in Chicago from August to September by 0.8 percent, a month after a 1.4 percent increase that was tied with Detroit as the second highest monthly gain in August. The only cities to post monthly gains for September were New York, Washington D.C. and Portland. Year-over-year, Chicago’s 5.0 percent decrease was also a small improvement from last month’s 5.8 percent yearly decline.
Going forward, it is difficult to see home values improving, particularly with a new wave of foreclosures set to hit the market. The robo-signing scandals in 2010, which involved banks hurriedly resolving foreclosures to oft-disastrous effects, severely halted the foreclosure process, and now that banks have caught up with their documentation, thousands of new foreclosure filings are all set to be delivered in the coming months.
Foreclosed properties can take years to sell – recent projections say it could take 15 years for just Fannie Mae and Freddie Mac to clear their foreclosure inventories – and the longer vacant REOs sit on the market, the more downward pressure they place on prices.