US house price

Home-Price Declines in 20 U.S. Cities Eased in April (Update2)
Share Email Print A A A
By Bob Willis

June 30 (Bloomberg) -- Home prices in 20 major U.S. metropolitan areas fell in April at a slower pace than forecast, a sign the plunge in real-estate values is abating.

The S&P/Case-Shiller home-price index decreased 18.1 percent from a year earlier following an 18.7 percent drop in March. The measure declined 19 percent in January, the most since the data began in 2001.

Price declines are likely to keep moderating as demand steadies and distressed properties account for a smaller share of transactions. Still, the highest jobless rate in 25 years is contributing to record foreclosures, which are likely to keep depressing values for months to come even as home sales steady.

“It is looking a little bit better,” said Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina. “The largest declines are probably past. When prices stop falling the erosion in household wealth will come to an end.”

Economists forecast the index would drop 18.6 percent, according to the estimates of 33 economists surveyed by Bloomberg. Estimates ranged from drops of 17.7 percent to 19.4 percent.

Stock futures extended gains following the report. The contract on the S&P 500 index was up 0.2 percent at 9:19 a.m. in New York.

The home-price index figures aren’t adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month-to-month.

Smaller Decline
The measure was down 0.6 percent in April from the prior month, the best performance since June 2008. Eight of the 20 cities showed an increase in prices from March, led by a 1.7 percent gain in Dallas.

“While one month’s data cannot determine if a turnaround has begun, it seems that some stabilization may be appearing in some of the regions,” David Blitzer, chairman of the S&P index committee, said in a statement.

Over the 12-month period ended in April, declines were most pronounced in Phoenix, which showed a 35 percent drop, Las Vegas followed with a 32 percent decrease, and San Francisco with a 28 percent fall.

Foreclosure filings, including default and auction notices as well as property seizures, climbed 18 percent in May from a year earlier, according to Irvine, California-based RealtyTrac Inc. The number topped 300,000 for the third consecutive month, with an estimated one in every 398 homes in some stage of foreclosure.

Sales Steady
The drop in prices caused by the seizures is helping stabilize home sales. Home resales climbed 2.4 percent in May to an annual pace of 4.77 million as the median sales prices slumped 17 percent, the third-largest decrease on record, the National Association of Realtors reported last week.

About 73 percent of all existing houses and condos sold in the Las Vegas-Paradise area were foreclosures last month, up from 56 percent a year earlier, according to figures from San Diego-based MDA DataQuick. Such sales accounted for 51 percent of all existing-home transactions in California, up from 40 percent a year ago, the research company said last week.

Still, distressed sales are abating nationally. The share of homes sold in foreclosure-related transactions was about 33 percent last month, down from the 40 percent to 50 percent seen earlier in the year, the agents’ group said last week.

Loss of Wealth
Declines in home values and stock prices destroyed a record $13.9 trillion in household wealth since late 2007, according to figures from the Federal Reserve.

The need to repair the damage will cause consumers to remain frugal, signaling the biggest part of the economy will be slow to recover. The savings rate climbed to a 15-year high of 6.9 percent last month, after reaching zero as recently as April of last year.

While the rise in foreclosures is likely to keep hurting prices, some companies are seeing signs demand is stabilizing.

Lennar Corp., the third-largest U.S. homebuilder, said last week that home deliveries and new orders rose 47 percent and 67 percent, respectively, in the second quarter from the previous three months. Chief Executive Officer Stuart Miller said the housing market “experienced an uptick in sales” in the quarter while not yet recovering from the slump.

“While we are sensing pent-up demand in the market, rising unemployment, increased foreclosures and tighter credit standards continue to present challenges for the industry,” Miller said in a June 25 statement. “This combined with a recent spike in mortgage rates has made it difficult to predict when the market will ultimately turn the corner.”
To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
Last Updated: June 30, 2009 09:20 EDT

Bilibala's comments:
Inline with my expectation, price still seeking for bottom while the sales is starting to rebound.