Tuesday, February 24, 2009

Case-Shiller Home Price Index falls slightly faster


The S&P Case-Shiller home price index for December 2008 was released today by Standard and Poors. The composite-10 declined 2.34% from November 2008 (last month it declined by 2.20%) and declined by 19.14% from a year ago (compared to 19.09% last month). The composite-10 is now down 28.34% from its peak. All 20 individual markets in the composite-20 are down year over year with Las Vegas and Phoenix down the most at -32.98% and -33.96% respectively. Dallas and Denver are down the least year over year at -4.26% and -4.00% respectively. All 20 markets were down in December compared to the previous month. The markets with the biggest declines from the peak are also declining the fastest. 10 markets have now dropped over 25% from their peak. The Composite-10 has now declined at a faster pace year over year for 24 straight months now.

You can click on the images for a larger view.

The CME futures market is pricing in a further drop of -9.39% by next December for the composite-10. 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 composite-10 did not record a 1% loss month over month until October 2007. Right now we are declining at a slightly faster pace than we did last year at this time. The month to month change in the composite-10 bottomed in February when it declined by 2.80% in one month and peaked in June with a 0.61% decline over the previous month. S&P Case-Shiller index uses a three month average. The CME futures market is pricing in that housing will bottom at 142 in September 2010. This is a 12.4% further drop from December 2008's mark of 162.17. The CME futures are pricing in that the home price index will recover to 152 by September 2012.







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