The S&P Case-Shiller US National Home Price Index dropped by another record. The March report was another drop of 2.2%. The Q1-2009 period does have a look-back to it that is older than more recent data, but the report showed a 19% drop. The drop for the 20-city report and the 10-city report showed 18.7% and 18.6% drops, respectively.
This report did act against equity futures because it is knocking down the notion that the housing sector is coming back. The problem with this report is that despite the Q1 period being a record drop, this data is older than more recent data.
The numbers are still staggering. This is a drop of 32.2% from the 2006 nationwide peak of 2006, and worse in some regions. We are also back to 2002 housing prices in aggregate.
We will not go so far as to call the housing market robust because it is not. It is far from that. But the new data with permits is mixed if you back out the multi-family projects. We are also starting to see a slight resurgence of activity. We have no hopes that the housing and construction activity will look anything at all like late 2004 through mid-2007. But this Case-Shiller data differs from other reports we have been seeing.
There is also a silver lining in the Case-Shiller data. The lower that index goes, the more and more affordable housing becomes. We would also note that while these prices were tanking the worst during the Q1 period also coincided with what was a foreclosure moratorium period where many quick sales and pre-foreclosure sales were commanding dirt cheap prices for qualified buyers. The lower prices are now driving the beginnings of what seems to be higher demand.
For the market to react this way makes the obvious even more obvious. Housing was grossly overpriced for years. Those part-time realtors who told you that housing always goes up, well you can call them and ask about that now. They are easy to find. They are at home, or at their parents’ houses.
JON C. OGG
May 26, 2009
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