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26-04-2011, 10:45 PM
Housing sector dangerously close to double-dip downturn
[Image: MW-]
WASHINGTON (MarketWatch) — U.S. home prices fell in February for the seventh straight month, according to a closely followed index released Tuesday, as the beleaguered market approaches a double-dip recession.
Home prices in 20 major U.S. cities fell 1.1% in February, according to the Case-Shiller home-price index released Tuesday by Standard & Poor’s.
Prices rose in one of 20 cities — hard-hit Detroit — in February on a monthly basis. Over the past year, only Washington has seen prices advance.
Prices fell 3.3% year-over-year in February, compared with a 3.1% year-over-year drop in January.
The 20-city index is slightly above its April 2009 trough, meaning that home prices have almost completely retreated from the gains they posted from May 2009 through June 2010. Falling below the April 2009 level would put housing in a double-dip downturn.
From its peak, the index has dropped 32.5%, S&P said.
“There is very little, if any, good news about housing. Prices continue to weaken; trends in sales and construction are disappointing,†said David Blitzer, chairman of the index committee at Standard & Poor’s.
Housing has been plagued by issues that have created a Gordian knot for the sector.
On the supply side, an oversupply of distressed properties is pushing prices down. There are also worries of a so-called shadow inventory of homes that sellers and banks want to list but are waiting for the right moment to do so.
On the demand side, many consumers are still having difficulty qualifying for mortgages even though rates are low.
Economists have said that a healthy labor market could help cure these ills, but the labor market has been struggling as well.
Some economists believe that sales may pick up in the spring if buyers become convinced that mortgage rates are likely to rise, given talk of a Federal Reserve exit from its ultra-easy monetary policy.
“We see no near-term prospect of sustained price increases but we think recent forecasts of a new wave of declines are way off the mark,†said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
“Volumes have recovered quite strongly in the existing-homes market in recent months and appear now to be stabilizing, so we expect prices to stop falling very soon too, and perhaps even to rise a bit,†he said.
The S&P/Case-Shiller index is based on a three-month moving average of home prices. So the February data reflect price data for December, January and February. This makes the index less volatile than other house price gauges, notably from CoreLogic and the Federal Housing Finance Agency.
In ascending order, here’s how each of the 20 cities fared over the past year: Phoenix, down 8.4%; Minneapolis, down 8.3%; Chicago, down 7.6%; Seattle, down 7.5%; Portland, Ore., down 7.0%; Miami, down 6.2%; Tampa, Fla., down 6.0%; Atlanta, down 5.8%; Charlotte, N.C., down 5.0%; Las Vegas, down 5.0%; Detroit, down 3.7%; San Francisco, down 3.5%; New York, down 3.1%; Cleveland, down 2.9%; Denver, down 2.6%; Los Angeles, down 2.1%; San Diego, down 1.8%; Dallas, down 1.2%; Boston, down 1.0%; and Washington up 2.7%.
And this is ok? Coupled with a bull rally with earning surprises? What is going on??
[Image: MW-]
WASHINGTON (MarketWatch) — U.S. home prices fell in February for the seventh straight month, according to a closely followed index released Tuesday, as the beleaguered market approaches a double-dip recession.
Home prices in 20 major U.S. cities fell 1.1% in February, according to the Case-Shiller home-price index released Tuesday by Standard & Poor’s.
Prices rose in one of 20 cities — hard-hit Detroit — in February on a monthly basis. Over the past year, only Washington has seen prices advance.
Prices fell 3.3% year-over-year in February, compared with a 3.1% year-over-year drop in January.
The 20-city index is slightly above its April 2009 trough, meaning that home prices have almost completely retreated from the gains they posted from May 2009 through June 2010. Falling below the April 2009 level would put housing in a double-dip downturn.
From its peak, the index has dropped 32.5%, S&P said.
“There is very little, if any, good news about housing. Prices continue to weaken; trends in sales and construction are disappointing,†said David Blitzer, chairman of the index committee at Standard & Poor’s.
Housing has been plagued by issues that have created a Gordian knot for the sector.
On the supply side, an oversupply of distressed properties is pushing prices down. There are also worries of a so-called shadow inventory of homes that sellers and banks want to list but are waiting for the right moment to do so.
On the demand side, many consumers are still having difficulty qualifying for mortgages even though rates are low.
Economists have said that a healthy labor market could help cure these ills, but the labor market has been struggling as well.
Some economists believe that sales may pick up in the spring if buyers become convinced that mortgage rates are likely to rise, given talk of a Federal Reserve exit from its ultra-easy monetary policy.
“We see no near-term prospect of sustained price increases but we think recent forecasts of a new wave of declines are way off the mark,†said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
“Volumes have recovered quite strongly in the existing-homes market in recent months and appear now to be stabilizing, so we expect prices to stop falling very soon too, and perhaps even to rise a bit,†he said.
The S&P/Case-Shiller index is based on a three-month moving average of home prices. So the February data reflect price data for December, January and February. This makes the index less volatile than other house price gauges, notably from CoreLogic and the Federal Housing Finance Agency.
In ascending order, here’s how each of the 20 cities fared over the past year: Phoenix, down 8.4%; Minneapolis, down 8.3%; Chicago, down 7.6%; Seattle, down 7.5%; Portland, Ore., down 7.0%; Miami, down 6.2%; Tampa, Fla., down 6.0%; Atlanta, down 5.8%; Charlotte, N.C., down 5.0%; Las Vegas, down 5.0%; Detroit, down 3.7%; San Francisco, down 3.5%; New York, down 3.1%; Cleveland, down 2.9%; Denver, down 2.6%; Los Angeles, down 2.1%; San Diego, down 1.8%; Dallas, down 1.2%; Boston, down 1.0%; and Washington up 2.7%.
And this is ok? Coupled with a bull rally with earning surprises? What is going on??
