The S&P Case-Shiller home price index for June 2008 was released today by Standard and Poors. The composite-10 declined 0.61% from May 2008 and declined by 17.00% from June 2007. The composite-10 is now down 20.29% from its peak. All 20 individual markets are still down year over year with Las Vegas and Miami down the most at -28.55% and -28.32% respectively. Charlotte and Dallas are down the least year over year at -1.04% and -3.23% respectively. 10 markets were up in June compared to the previous month (Denver, Chicago, Boston, New York, Atlanta, Detroit, Minneapolis, Charlotte, Cleveland, and Dallas). The markets with the biggest declines from the peak are also declining the fastest; markets that declined the least are starting to rise. There are 11 markets that were down less than 15% year over year. 9 of those 11 markets were up in June compared to May 2008 and those 11 averaged a monthly gain of +0.52%. The other 2 markets were slightly down (Seattle and Portland). Of the 9 markets that are down over 15% year over year, 8 were down compared to last month (Detroit eeked out a minor gain) and the 9 markets averaged a monthly decline in value of -1.40% in June. The composite-10 is now down -20.29% from its peak. 8 markets have now dropped over 25% from their peak.
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The CME futures market is pricing in a further drop of -11.89% by next June for the composite-10. It is encouraging that some markets are posting month over month gains. The month to month change in the composite-10 has also improved from February when it declined by 2.80% in one month to a 0.61% decline last month over the previous month. However, the home price index is not seasonally adjusted. In the last 20 years, home prices have averaged appreciation of 5.29% a year. March through August are typically the strongest months for appreciation and home prices have on average appreciated by 4.40% during that 6 month period. September through February are the weakest months; home prices have on average appreciated by only 0.89% during that 6 month period. In 2007, the declines were moderate in the first half of the year and started rapidly declining in August.
The CME futures market is pricing in that housing will bottom at 150 in March 2010. This is a 16.8% further drop from June 2008's mark of 180.38. The CME futures are pricing in that the home price index will recover to 156 by September 2012. However, adjusted for inflation, real prices would still be declining (assuming that CPI-U drops to 3%).
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