Economic data: not quite a turnaround
Prices of single-family homes across the United States are still falling, but the declines are slowing down, according to one of the leading housing market indictors. Numbers released by Standard & Poor’s on Aug. 26 showed a 15.4 percent decline in the second quarter of 2008, compared to the same quarter of 2007. The S&P/Case-Shiller Index, which covers all nine U.S. census divisions, also reported annual declines of 17 percent and 15.9 percent, respectively, for its 10-city and 20-city composite price index.
These declines were less than economists had forecast, however. Quarterly figures for nationwide home prices showed a 2.3 percent drop in the three months through June from the previous three months, compared with a 6.8 percent decline in the first quarter of 2008.
“While there is no national turnaround in residential real estate prices, it is possible that we are seeing some regions struggling to come back, which has resulted in some moderation of price declines at the national level,” said David Blitzer, chairman of the index committee at Standard & Poor’s, in a prepared statement. “Depending on where you focus on the details of the report, you can see some different stories on where home prices are headed.”
Record year-over-year declines were reported in both the 10- and 20-city composites in June, Blitzer noted; yet the numbers were almost unchanged from May, indicating the home price declines may be slowing.
“In June, nine of the 20 cities were up month-to-month compared with seven in May,” Blitzer observed. He added, however, that no market has shown a consistent positive return over the past 12 months.
Las Vegas remains the weakest real estate market in the country, according to the S&P/Case-Shiller Index, with an annual decline of 28.6 percent in June. Miami and Phoenix, at a negative 28.3 percent and 27.9 percent, respectively, follow close behind.
On the plus side, Denver and Boston were the best performing markets in June, returning price gains of 1.5 percent and 1.2 percent. Each city also showed three consecutive months of increases. Charlotte and Dallas recorded four straight months of positive returns, according to the index. Housing prices in Minneapolis increased during May and June, at 0.6 percent and 1.0 percent, respectively.
On a national level, the residential real estate market still presented a shadow of its former self. As of June 2008, the 10-city composite had fallen by 20.3 percent compared to its peak in June/July of 2006. The 20-city index dipped 18.8 percent from two years ago.
Figures released by the U.S. Department of Commerce on Aug. 19 provided little solace for home builders. Housing starts for July were 965,000 units on an adjusted annual basis, well below the 1 million mark and 11 percent lower that last month’s 1.08 million annual starts.
Most of the blame for the poor showing was laid at the doorstep of single-family housing. Year-to-date starts for this sector, on average, are down 40.2 percent compared to 2007. The multi-family market is showing increases over last year, however. Between January and July of 2008, multiple unit starts grew 19.4 percent, according to government figures.
Regional differences point to an uptick for the West last month, where single-family housing starts rose 5.9 percent from the previous month. The South and the Midwest showed declines, at 7.8 percent and 6.1 percent respectively. Only the Northeast showed a double-digit gain—11.3 percent for single-family housing starts in July.
Looking back over the lasts even months, the monthly average of total housing starts for the entire United States is down 30 percent. The West showed declines of 37.7 percent for total housing starts from January to July 2008. In the South, housing starts slipped 30.3 percent, and in the Midwest, 32.7 percent. The northeastern United States, where housing starts retreated only 5.8 percent, has been the strongest home-building market so far this year.