Continuation of Negative Annual Returns in Housing

It seems that today is Housing day at the Big Picture: First, we looked at UK MEW; Then, we saw that great NYT chart;

And, since its the last Tuesday of the month, its Case Shiller time: Ouch!

Case Shiller Housing Index July 2007

Case_shiller_july

Here’s the excerpt:

"Data through July released today by Standard & Poor’s for its S&P/Case-Shiller® Home Price Indices, the leading measure of U.S. home prices, shows a continuation of negative annual returns in the 10-City Composite and the 20-City Composite, as well as 15 of the 20 metro area indices. Both composite indices have registered negative annual growth rates since the beginning of the year. In addition, both indices rate of decline has become larger in each of the seven months from January through July.

The chart above, depicting the annual returns of the 10-City Composite and the 20-City Composite, shows the 10-City Composite was down 4.5% versus July of 2006, while the 20-City Composite was down 3.9% over the same time period.

“The decline in home prices clearly continued into the summer months,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “The year-over-year decline reported for the 10-City Composite is the lowest since July 1991. The lowest annual decline in this Index, which dates back to January 1987, was -6.3%, which was reported in April 1991. The further deceleration in prices is still apparent across the majority of regions, with 16 of the 20 metro areas showing a drop in their annual growth rate from what was reported in June.”

Bloomberg reported:

"Home prices in 20 U.S. metropolitan
areas fell the most on record in July, indicating the threat to
consumer spending was rising even before credit markets seized
up in August
, a private survey showed today.         
      

Values dropped 3.9 percent in the 12 months through July,
steeper than the 3.4 percent decrease in June, according to the
S&P/Case-Shiller home-price index. The index declined in January
for the first time since the group started the measure in 2001,
and has receded every month since then.         

Stricter lending standards and reduced demand are
prolonging the housing slump, now entering its third year.
Prices may continue to fall as homes stay on the market longer,
economists said. Diminished housing wealth may spur households
to pare spending, hurting economic growth." (emphasis added)         

No bottom in sight anytime soon. My best guess is late 2008 to 2009 . . . unless we have a recession. Than, all bets are off.

Note that all 10 regions covered are now in the red, and for the most part, rather deeply; Only Chicago and Denver are off by less than 1%.

Case_shiller_table

via TFS Derivatives

Sources:
Summer Swoon Evident in the S&P/Case-Shiller® Home Price Indices
Sep 25, 2007 09:00 AM EST PDF
http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_092512.pdf

S&P/Case-Shiller Home Price Index Falls 3.9% in July
Courtney Schlisserman
Bloomberg, Sept. 25 2007
http://www.bloomberg.com/apps/news?pid=20601087&sid=aqOuSeaFXx3Y&

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