Home Price Indexes Hint at Turnaround

Case-Shiller, FHFA show gains in May, June

By Inman News, Tuesday, August 25, 2009

Home prices rose 1.4 percent on average from May to June in 20 markets tracked by a Standard & Poor’s/Case-Shiller home-price index — the second consecutive month-over-month increase in the 20-city composite.

Another home-price index maintained by the government to track purchases involving mortgages owned or guaranteed by Fannie Mae and Freddie Mac also showed home prices picking up in May and June.

Prices were on the rebound in June in all but two of the markets tracked by the S&P/Case-Shiller 20-city composite — Detroit and Las Vegas — S&P said. Although the 20-city composite index was also up 0.5 percent from April to May, prices remained significantly lower than a year ago.

Looking back a year, the 20-city composite index was down 15.4 percent at the end of June. All 20 markets tracked saw annual price declines, and 15 experienced double-digit price drops.

The separate S&P/Case-Shiller National Home Price Index, which covers all nine U.S. Census divisions, showed average prices at the end of the second quarter down 30.2 percent from their 2006 peak, to levels last seen in early 2003.

But looking back a year, the 14.9 percent annual decline in the National Home Price Index was less severe than the 19.1 percent annual decline posted during the first quarter.

The National Home Price Index also registered a 2.9 percent gain from the first quarter to the second, which was the first quarter-to-quarter gain in three years. Home sales often pick up in the spring, and the seasonally adjusted increase in the National Home Price Index from the first quarter to the second was a more modest 1.4 percent.

Both the unadjusted and seasonally adjusted data show “hints of an upward turn from a bottom,” said David Bitzer, chairman of the S&P index committee. Some of the hardest-hit cities, especially those in the Sun Belt, show continued weakness, he said in a statement.

Another index that’s based on purchases and refinancings of homes involving loans eligible for purchase or guarantee by Fannie Mae and Freddie Mac showed annual home price declines in all but 72 of 296 markets tracked.

The Federal Housing Finance Agency’s all-transactions house price index, which factors in not only home purchases but appraisals conducted when borrowers refinance, fell 2.4 percent from the first to second quarter, and 4 percent from a year ago.

Another FHFA index, which excludes refinancings and is seasonally adjusted, showed home prices down 0.7 percent from the first to second quarter and 6.1 percent from a year ago.

The FHFA’s seasonally adjusted, purchase-only index showed home prices rising 0.5 percent in June and 0.6 percent in May. Although those gains were more than offset by earlier declines that kept the index in the red for the quarter, the monthly index has risen a net of 0.5 percent for the first six months of the year.

“For the second consecutive quarter we are seeing much slower rates of depreciation in the (home-price index) than in 2008,” said FHFA Chief Operating Officer Edward J. DeMarco in a statement. “This is further evidence that prices may be stabilizing for the nation as a whole.”