Standard & Poor’s Case-Shiller Home Price Indices – which exclude apartment sales and include whole Metropolitan Statistical Areas (MSAs) – show that U.S. prices fell in the fourth quarter. But the annual rate of return improved as compared with the third quarter.
“As measured by prices, the housing market is definitely in better shape than it was this time last year,” said David M. Blitzer, S&P’s chairman of the Index Committee. “However, the rate of improvement seen during the summer of 2009 has not been sustained.
The chart above depicts the annual returns of the U.S. National, the 10-City Composite and the 20-CityComposite Home Price Indices.
Prices fell 2.5 percent in the fourth quarter from a year earlier, while the annual rates of decline went from 19 percent in the first quarter, to 14.7 percent in the second and 8.7 percent in the third. In December, the 10-City and 20-City Composites recorded annual declines of 2.4 percent and 3.1 percent, respectively.
The indices have trended better every month since the beginning of the year. Said Blitzer:
“In the most recent months we are seeing fewer and fewer MSAs reporting monthly gains in prices. Only four cities saw month to month improvements in December over November, when you look at the raw data.”
Noting that it was a seasonally slow period for home prices, he said it was not surprising to see better statistics in the seasonally-adjusted data, where 14 of the markets and the two monthly composites all rose in December.
Similarly, the National Composite fell by 1.1 percent in the fourth quarter but climbed 1.6 percent on a seasonally-adjusted basis. Blitzer continued:
The chart above shows the index levels for the U.S. National Home Price Index, as well as its annual returns. As of the 4th quarter of 2009, average home prices across the United States are at similar levels to what they were in the summer of 2003.
Although the 4th quarter values fell when compared to the 3rd quarter, the decline in the annual rate of return has “significantly” improved, Case-Shiller said.
The 10-City and 20-City Composites continue to show improvement in their annual rates of return. In fact, all 20 metro areas and the two Composites saw improvement in their annual returns compared with November’s data. Only three cities – Detroit, Las Vegas and Tampa – still posted double-digit annual rates of decline as of the end of 2009. Miami, Phoenix and Seattle moved above such rates with December’s report.
The New York index declined 0.7 percent between November and December last year, with a 6.3 percent decline year-over-year.
Looking at the monthly statistics, 15 of the 20 metro areas showed a decline in December over November, with Chicago falling the most, down 1.6 percent. Las Vegas finally posted its first gain in more than three years, up 0.2 percent. The Southwest continues to be a bright spot: San Diego recorded its eighth consecutive monthly increase and Los Angeles and Phoenix, their seventh.
Three of the markets – Charlotte, Seattle and Tampa – dropped to new low index levels as measured by the past four years. In other words, any gains that they might have seen in recent months have been erased. December is now considered their current trough value for them.
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