Housing Price Declines Slower in March

Today’s release of the S&P/Case-Shiller Home Price Indices indicate that housing prices across the US are down -1.9% from March 2011 and down -2% for the first quarter of 2012 compared with the first quarter of 2011. Month-over-month changes in the 10-city and 20-city composite indices were minimal, but “with all these latest data, all three composites still posted their lowest levels since the housing crisis began in mid-2006,” according to today’s report.

Does this mean that US housing prices have begun to turn around? Not exactly:

While there has been improvement in some regions, housing prices have not turned. … There are some better numbers: Only three cities [in the 20-city composite index] – Atlanta, Chicago and Detroit – saw annual rates of change worsen in March. The other 17 cities and both composites saw improvement in this statistic, even though most are still showing a negative trend. Moreover, there are now seven cities – Charlotte, Dallas, Denver, Detroit, Miami, Minneapolis and Phoenix – where the annual rates of change are positive. This is what we need for a sustained recovery; monthly increases coupled with improving annual rates of change. Once we see this on a broader level we will be able to say the market has turned around.

With the beginning of the 2012 home-buying season in full-swing, the S&P/Case-Shiller data needs to show improvement in both monthly and annual rates of change across a larger number of cities. While this month’s report is encouraging for the housing market, prices need to improve in more cities and over a longer stretch of months before the crisis can be declared over.

Paul Ausick