Home Prices Continue Decline, but at Slowing Rate

The closely watched S&P/Case-Shiller Home Price Index, in its June report, showed continued record price declines, but at a slowing rate, and a mixed picture across the country.

The report speaks of "...some regions struggling to come back...," referring to nine that increased month-to-month in June (compared with seven in May), these nine having helped to moderate the national numbers.

This is a the same "two Americas" picture reflected by the National Association of Realtors in its July home sales report a few days earlier.

Among the nine, "...Denver and Boston were the best performing markets for the month," with +1.5% and +1.2% month-to-month gains, respectively. Both have had three consecutive months of such gains.

Although "the rate of home price decline may be slowing," and "there are some improving regional numbers," the overall housing market "remains weak," the report concluded.

Home Sales Increase 3.1% in July

Existing home sales increased 3.1% from June to July, nationally, according to the National Association of Realtors, but were still running 13.2% behind July 2007.

At the same time, total housing inventory rose 3.9% in July, led by a sharp increase in condo inventory. Notably, single-family homes, which make up most of the nations's housing supply, witnessed a drop in inventory from June to July.

The New York Times published a gloomy report on the new figures, pointing out that at least a third of the July sales were foreclosed homes, or homes sold at a loss by owners who had no alternative. Many of these distressed sales occurred in places like California and Florida, The Times acknowledged, areas that had the biggest run-up in prices during the boom.

But it failed to mention that as many as nine major urban centers--Boston among them--are now witnessing what many regard as early signs of recovery.

In the Boston region, for example, in July, the supply of single-family homes declined to 6.8 months of inventory from 7.2 months a year ago. Condos dropped to 6.6 months from 7.9 months a year ago. 5-6 months of inventory is often said to reflect a "normal" market.

Correspondingly, regional prices are also showing signs of bottoming.

Despite this good news, July's single-family sales in the Boston region, were still down 10.8% from a year ago, and condo sales were off 8.5% from last year.

NAR: Gradual Sales Recovery Seen

In its latest forecast, the National Association of Realtors projects some improvement for existing-home sales in the months ahead, with broader gains seen by the fourth quarter as buyers take advantage of new provisions in the recently passed housing stimulus bill.

Lawrence Yun, NAR chief economist, said sales have been in a pattern of rising and falling within a fairly narrow range. "The vacillation of data from one month to the next indicates a housing market in transition," he said. "The rise in pending home sales [in June]was broad-based with all four regions showing gains. This is welcome news because a rise in contract activity is necessary for an overall housing recovery. With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009."

Boston Prices Improve Again, Despite Bad News Nationally

The S&P/Case-Shiller Home Price Index reported a record decline in prices across the country for May.

Despite that bad news, Boston and six other metro areas recorded modest improvements for the second month, suggesting a possible easing of the decline. Here's The New York Times story, published July 30:

"Home prices, already falling at the steepest rate in two decades, tumbled again in May, according to the Standard & Poor’s/Case-Shiller index, a widely watched survey that measures prices in 20 major metropolitan areas. Prices were down 15.8 percent from May 2007, including a 0.9 percent one-month drop this May.

"The 10-city price index, which dates to 1988, dropped 16.9 percent for the year, its sharpest decline on record.

"All 20 cities measured by the index showed annual declines in home values, and 10cities have suffered double-digit percentage declines in the last year. Miami and Las Vegas have fared the worst, with prices in each city dropping more than 28 percent since May 2007.

"There were some signs that the decline has started to abate. Prices in seven regions, including Boston, Dallas and Charlotte, N.C., improved in May, some for the second consecutive month. Boston, for example, was up 1.05 percent in May, though values are still 6.2 percent below where they were a year ago..."

Go to: full New York Times story, and Standard & Poor's press release.