Tuesday, September 29, 2009

U.S. Home Prices Increase for the Third Month in a Row For the First Time Since Spring 2006

NEW YORK (Reuters) - U.S. single-family home prices in July rose from the previous month, surpassing forecasts and bolstering the case for housing market stability after a three-year plunge, Standard & Poor's said on Tuesday. The S&P/Case-Shiller composite index of 20 metropolitan areas rose 1.6% in July from June, more than triple the estimate of a 0.5% rise found in a Reuters poll. This index rose 1.4% the month before. The 10-city index gained 1.7% in July after a 1.4% rise the previous month (see top chart above, data here).

"These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer's Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures," David Blitzer, chairman of the index committee at S&P, said in a statement.

MP: The 1.61% July increase in the Composite-20 Index was the largest monthly gain since a 1.62% increase in April of 2005, and the period of three consecutive monthly increases in May, June and July of this year is the first time in more than three years that the index has increased three months in a row (see bottom chart above).


At 9/29/2009 10:02 AM, Anonymous Kevin said...

Shiller is a crap index which has exaggerated the decline - it excludes many smaller towns and rural areas that have seen much smaller declines.

At 9/29/2009 10:09 AM, Anonymous Yell It said...

Watch this index fall in August. How do I know? Because the NAR has already reported falling sales and prices for August.

You're like a cheerleader for the Detroit Lions.

Watch this index disapppear from CD the moment it falls.

At 9/29/2009 10:37 AM, Anonymous E Sized said...

The Conference Board Consumer Confidence Index FELL to 53.1 in September from 54.5 in August. Both the Present Situation and the Expectations Index fell.

Carpe Diem declined to report or comment.

At 9/29/2009 12:18 PM, Anonymous Starbuck said...

Kevin, the alternative measures have problems too.

The FHFA price indexes exclude jumbo loans. Median prices don't control for quality.

All of the measures are showing stabilization or rises in house prices. The question is WHY.

CD has concluded it's because a recovery has begun. The intellectually honest Calculated Risk report correctly states that there is a debate over whether it's from seasonal mix of distressed and nondistressed homes, first time home buying frenzy, or artificial slowing of foreclosures. I say all of the above.

Foreclosures aren't actually slowing, they're gaining speed. But they would be even higher if banks foreclosed on all the seriously delinquent properties. They either can't handle the load, are waiting for better conditions, or state laws are inhibiting them.

House prices will fall as soon as the August numbers come out. It was a terrible month of sales and a portent of how bad things will get later this year when the stimulus runs out, foreclosures rise, unemployment rises, Option ARMs and Alt A recast, and interest rates rise. It will be a perfect storm which will make the subprime crisis feel like a tropical breeze.

At 9/29/2009 2:03 PM, Blogger Mark J. Perry said...

Starbuck: See recent CD posts on August real estate sales for California and Florida, both showing continuing increases in sales.

At 9/29/2009 10:13 PM, Anonymous Starbuck said...

Mark J. Perry:

See reality.

What data are you reading? The reports from DQNews say the following:

"Bay Area home sales bucked the seasonal norm and fell last month from July"

"Home sales dipped in Southern California last month, the result of a thinning inventory of foreclosure properties and financial uncertainty among potential home buyers."

"Miami region August home sales dipped nearly 10 percent from July, with transactions in the higher price ranges falling a bit more sharply."

August home sales are usually HIGHER than July. The boom, fueled by high foreclosures, low prices, a tax credit, low interest rates, and FHA financing is OVER!

Even if you're looking at year-over-year sales:

Southern California:
July: +18.6%
August: +11.0% SLOWING

Bay Area CA:
July: -16%
August: +4% RISING

July: +24.4%
August: +27.4% SMALL RISE

The year-over-year results are mixed, and these increased sales are resulting from extreme price declines.

There are 382 metropolitan areas where house prices are tracked by the FHFA. According to their second quarter 2009 house price index, 271 of them (71%) had house prices decline in the past year.

According to the FHFA Purchase-Only Index, FORTY-EIGHT states (94%) had their house prices decline year-over-year in second quarter 2009.

The National Association of Realtors reports that THIRTY-NINE states (76%) had existing home sales decline, year-over-year in second quarter 2009 (seasonally adjusted).

You are carefully selecting anecdotal data from the FEW markets which are showing some strength. What kind of honest analysis is that?

In the vast majority of states and metropolitan areas, house prices are still declining AND home sales are falling.

What world do you live in?

At 9/30/2009 7:11 AM, Anonymous Kevin said...

Mr. Perry

Don't bother trying to reason with a know-it-all. Amazing that Starbuck points out that 71% of markets down over past year - that means nearly three in ten are UP! You'd never know that from the national media.

Odds are Mr. Starbuck is short the stock market and trying fruitlessly to persuade the world he's right while his portfolio is getting crushed on a daily basis.

At 9/30/2009 10:32 AM, Anonymous Starbuck said...

Kevin, I'm not a "know it all." I'm a "know much more than you."

If you can't understand that 71% of American cities STILL losing house value after 4 to 8 quarters of falling is a really, really bad thing, talking to you is a waste of oxygen.

Only someone like you and Perry would dare to spin 71% of metro house prices down into 29% up and snicker like a school girl. When we reach a 12% unemployment rate, try consoling us that 88% of the labor force is still employed. When commercial vacancies reach 30%, retort that 70% of it is still occupied.

When the stock market falls 20%, console yourself you still have 80% of you portfolio. BTW, I left the stock market in 2007 and bought in October 2008. I sold all my stock at the opening bell today, as a matter of fact. I'm in TIPS through the middle of next year. Your stocks and bonds are both going to plummet when Obama stagflation kicks in.

It amazes me how thoroughly dense you people can be.


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