Apartment dwellers should ignore these data

S&P/Case-Shiller reported today that the annual rate of decline in house prices is slowing.

Although still negative, the rate of the 10-City and 20-City Composites, which exclude apartment sales, improved in May for the fourth consecutive month in 2009, the company said.

The 10-City and 20-City Composites declined 16.8% and 17.1%, respectively, compared with the same month last year. These values are improvements over April’s data, which show annual declines of 18.0% and 18.1%, respectively. After 16 consecutive months of record annual declines, beginning in October 2007 and ending in January 2009, the indices have now shown four consecutive months of improvement in annual returns.

case shiller“The pace of descent in home price values appears to be slowing” said David M. Blitzer, chairman of the Index Committee at Standard & Poor’s. He continued:

“There is a clear inflection point in the year-over-year data, due to four consecutive months of improved rates of return, after the steep decline that began in the fall of 2005. In addition to the 10-City and 20-City Composites, 17 of the 20 metro areas also saw improvement in their annual returns compared to those of April. Looking at the monthly data, 13 of the 20 metro areas reported positive returns; and the 10-City and 20-City Composites reported positive returns for the first time since the summer of 2006. To put it in perspective, these are the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing.

“While many indicators are showing signs of life in the U.S. housing market, we should remember that on a year-over-year basis, home prices are still down about 17% on average across all metro areas, so we likely do have a way to go before we see sustained home price appreciation.”

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Smile about June sales of new homes, then frown

Sales of newly built, single-family homes rose 11 percent in June to a seasonally adjusted annual rate of 384,000 units, according to the U.S. Commerce Department.

Coming on the heels of an upwardly revised number for May, the gain marks a third consecutive month of improved sales activity.  Whether it’s a great leap forward remains to be seen.

In fact, the number of sales on a seasonally adjusted basis–36,000–represented the weakest June sales since 1982.

And there are plenty of factors that suggest the cheery news needs to be taken with at least half a grain of salt.  Continue reading