The S&P Case-Shiller home price index continued its sharp decline in February as both the 10-city and 20-city composite indexes posted record annual declines in excess of 12.5%.
The 20-city composite index, which tracks the price path of typical single-family homes in 20 metropolitan areas, fell by 12.72% over the year to its lowest since December 2004. The 10-city composite index set yet another record, falling by 13.55% since last year.
Seventeen of the 20 metropolitan areas posted record low annual declines, with half of the 20 metropolitan areas posting double-digit declines.
"Prices of single family homes continue to drop across the nation," said Standard & Poor index committee Chairman David Blitzer, adding there is no sign of a bottom in the numbers.
"All 20 metro areas were in the red for the February-over-January reading. In addition, 19 of the 20 MSAs are still reporting negative annual returns," he added. "The monthly data show that every one of the MSAs has now declined every month since September 2007, marking six consecutive months. On top of that, the declines have remained steep with eight of the 20 MSAs and both composites reporting their single largest monthly decline in February."
Ian Shepherdson, chief economist at High Frequency Economics, said, "We think it very likely that the plunge in home prices is a key driver of the collapse in consumers' confidence, which is now a good deal weaker than traditional models, based on stock and gas prices, imply. If so, the numbers will only get worse, and spending will follow, falling a long way for a long time."
The 20-city composite now stands at a level of 175.94 while the 10-city composite is at 190.58.
TJ Marta, fixed income strategist at RBC Capita Markets, said that rising foreclosures and vacancies will keep the downtrend in price changes steep. "The good news is that the faster prices correct, the faster that inventories can clear and the faster the economy will be able to return to trend growth."
The weakest markets over the past year have been Las Vegas and Miami, which have fallen by 22.8% and 21.7%, respectively.
Jacqui Douglas, economic strategist at TD Securities, said, "Charlotte, NC continues to be the only Composite-20 city posting year-over-year gains, although only barely at 1.5% year over year. The Y/Y trend in Charlotte will likely turn negative soon enough, as the 3-month annualized trend in prices continues to come in below zero, at -4.3% in February."
In the previous month, the 20-city composite had fallen by 10.7% over the year, while the 10-city composite had fallen by 11.4%, while in the December report, the 20-city composite recorded an annual decline of 9.1% and the 10-city composite had set a new record by declining 9.8%.
By Patrick McGee and edited by Nancy Girgis