Case-Shiller: home prices fall even further

The S&P/Case-Shiller® Home Price Indices were released today. They showed a further decline in home prices in the United States through August 2008 (the data most recently available). In the year to August, prices dropped 17.7% for the Composite-10 index and 16.6% for the Composite-20 index.

Among the twenty cities tracked in the index, particularly hard hit last month were many of the bubble cities – Phoenix, Los Angeles, San Diego, San Francisco, Miami and Las Vegas. The only cities registering a rise on a month-to-month basis were Boston and Cleveland, where things look to be bottoming.

I have been very much out of step with the increasingly pessimistic punderati because I do believe that housing declines are becoming less pronounced and that more than half of the declines have been registered. That said, the Composite-10 index shows a 27.7% decline peak-to-trough and the Composite-20 index shows a decline of 25.2% peak-to-trough, both figures adjusted for inflation. Unless we see a real Armageddon scenario, we are easily more than halfway through house price declines in the U.S.

But, nevertheless, let’s get into our Case-Shiller time machine and go back to the time when we last saw house prices this low in each of the twenty markets. The answer is in the chart below.

Canada's housing market is coming unstuck
Subprime good, prime bad


Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.