The S&P Case-Shiller home price index for May 2008 was released today by Standard and Poors. The composite-10 declined 0.91% from April and declined by 16.87% from May 2007. The composite-10 is now down 19.80% from its peak. All 20 individual markets are still down year over with Las Vegas and Miami down the most at -31.41% and -31.22% respectively. Charlotte and Dallas are down the least at -2.00% and -3.84% respectively. 7 markets were up in May compared to the previous month (Denver, Boston, Atlanta, Minneapolis, Charlotte, Portland, and Dallas). The markets with the biggest declines from the peak are also declining the fastest. The markets with smaller declines from the peak mostly rose last month or had a minor decline. The composite-10 is now down -19.80% from its peak. 9 markets have now dropped over 20% from their peak. The CME futures market is pricing in a further drop of -13.78% by next May 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 0.91% 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. Autumn and Winter will be a better indicator to see if the market is finding a bottom.
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2 comments:
Great Charts. FWIW, I believe falling house prices are a long term blessing. I don't see how permanently high housing prices would be a benefit to our country.
Wealth is not free.
I agree. Increases in housing prices should go up hand in hand with increases in income. During the last decade incomes have slumped. The inflated home prices put a lot of stress on the budgets of recent homebuyers.
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