The S&P/Case-Shiller Index for U.S. housing came out today. It was a pretty nasty little report. It showed a clear acceleration in home price declines for the month of October, the latest month for which data is available. In the Composite-10, prices are a full 18.6% lower than they were last October. While I have believed the pace of house price declines was slowing, this report pours cold water on that thesis. The report also suggests that house prices will be a major concern for the incoming Obama Administration.
The Wall Street Journal said he following about the declines:
Home prices continued to drop as the economic downturn deepened further in October, according to the S&P/Case-Shiller home-price indexes, a closely watched gauge of U.S. home prices, with home prices in the Sun Belt continuing to be hit hardest.
“The bear market continues; home prices are back to their March 2004 levels,” said David M. Blitzer, chairman of S&P’s index committee. He added that both composite indexes and 14 of the 20 metropolitan areas are reporting new record declines. As of October, the 10-city index is down 25% from its mid-2006 peak and the 20-city is down 23%, Mr. Blitzer said.
The indexes showed prices in 10 major metropolitan areas fell 19% in October from a year earlier and 3.6% from September. The drop marks the 10-city index’s 13th straight monthly report of a record decline.
In 20 major metropolitan areas, home prices dropped 18% from the prior year, also a record, and 2.2% from September.
Once again, none of the regions was able to stave off a decline from September to October.
While the WSJ article goes on to point out the meltdown in house prices across the Sun Belt, what was striking for me was the across the board declines one sees here. I have marked the relevant columns in the chart below.
Coming on the heels of the credit crunch, the data show a decline in every single city in the entire Composite-20. Obviously, credit crises are not good for house prices. The Obama Administration should take this to heart as they decide how to tackle a continued lending crunch.
S&P/Case-Shiller Home Price Indices – S&P Website
Case-Shiller Index Shows Sharpest Home-Price Declines in Sun Belt – WSJ