Is the party officially over?
S&P Dow Jones Indices said today that the increase in home prices, which has shown diminishing energy for months, experienced a broad-based slowdown in September. The company's Case-Shiller Home Price Indices continued to show gains over the levels of a year earlier, but the size of those gains continued to contract.
The Case-Shiller National Index rose 4.8 percent from September 2013 to September 2014 while the 10-City Composite posted a 4.8 percent increase compared to September 2013 and the 20-City was up 4.9 percent. The respective year-over-year gains for the two Composites in August were 5.5 and 5.6 percent. Charlotte and Dallas were the only cities to see stronger annual gains in September than in August while Cleveland was unchanged.
Both city indexes declined marginally from their August levels while the National Index was down 0.1 percent compared to the previous month. Nine cities posted monthly increases, nine saw their price levels fall and two were unchanged. The largest month-over-month change was in Washington, D.C. with a drop of 0.4 percent.
David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indies said that overall trend in home prices continues lower. "The National Index reported a month-over-month decrease for the first time since November 2013. The Northeast region reported its first negative monthly returns since December 2013 and its worst annual returns since December 2012 due to weaknesses in Washington D.C. and Boston. The West and Southwest, previously strong regions, are seeing price gains fade. The only region showing any sustained strength is the Southeast led by Florida; price gains are also evident in Atlanta and Charlotte.
Among individual cities Blitzer said that Las Vegas, which has shown double- digit annual gains, posted an annual return of 9.1%, its first time below 10% since October 2012 but Miami "continues to impress with another double digit annual gain of 10.3%. It is the only city that currently has a year-over-year double digit gain. Charlotte was the only city in September to show an annual increase relative to last month. Eighteen of the 20 cities reported slower annual gains compared to last month.
"Other housing statistics paint a mixed to slightly positive picture. Housing starts held above one million at annual rates on gains in single family homes, sales of existing homes are gaining, builders' sentiment is improving, foreclosures continue to be worked off and mortgage default rates are at pre- crisis levels. With the economy looking better than a year ago, the housing outlook for 2015 is stable to slightly better."
As of September average home prices across the U.S. are back to the levels of the spring of 2005. Average home prices for the metropolitan statistical areas (MSAs) in the 10-City and 20-City Composites are back to their levels in the autumn of 2004. Measured from their June/July 2006 peaks, the decline for the two Composites is about 15-17 percent. The 10-City has recovered from the March 2012 trough by 28.8 percent and the 20-City by 29.6 percent.
The Case-Shiller indices are constructed to track the price path of typical single-family homes located in the identified MSAs. Each index combines matched price pairs for thousands of individual homes from arms-length sales data. The National Index tracks the value of single-family housing within the U.S. and is a composite of home price indices for the nine U.S. Census divisions. The indices have a base value of 100 in January 2000, thus a current index of 150 indicates appreciation of 50 percent since that date for a typical home within the subject market. The only city remaining below the base value is Detroit with a current value of 98.6.