The Overall Drops In The S&P/Case-Shiller Monthly Home Price Indices Slowed In March, But 12 Cities Hit New Lows

The Overall Drops In The S&P/Case-Shiller Monthly Home Price Indices Slowed In March, But 12 Cities Hit New Lows: "

U.S. home price declines slowed in March 2011 according to the S&P/Case-Shiller Home Price Indices. While the month marks the eighth consecutive month of declines for U.S. home prices on a nonseasonally adjusted basis, the monthly decline was slower in March than a month earlier. The nonseasonally adjusted 20-City S&P/Case-Shiller home price index fell 0.8% in March. This is a slight improvement from 1.1% drops each in January and February. However, the same index has dropped 7.2% since July 2010 and 3.6% from March 2010. The composite index is currently at about the same level as in early-to-mid-2003, and several regional home price indices have been posting new lows in recent months. In fact, 12 regions out of 20 are facing new lows since the mid-2006 peak, and 13 regions are currently below their early 2009 lows.



In addition, the S&P/Case-Shiller Quarterly National Index dropped 4.2% in first-quarter 2011 and 5.1% during the last four quarters. The National Index is near its mid-2002 levels. This quarterly index covers single-family home prices for the nine U.S. Census Divisions and is reported quarterly.



We believe the declines in the home price indices reflect poorly on the U.S. housing market, as well as the performance of the underlying collateral in U.S. residential mortgage-backed securities. In addition, the amount of shadow inventory (or, the outstanding properties whose borrowers are or recently were 90 days or more delinquent on their mortgage payments, properties currently or recently in foreclosure, or properties that are real estate owned), slowly improving existing home sales, and the high unemployment rate will continue to slow down the housing market recovery in our view. We expect U.S. home prices will remain weak and could decline up to an additional 5% below their early 2009 lows this year as sales slowly begin to improve through the spring.

Key Highlights

• The 10- and 20-City seasonally unadjusted S&P/Case-Shiller Home Price Indices declined 2.9% and 3.6% on a year-over-year basis, and declined 0.6% and 0.8%, respectively, in March alone.


• On a monthly basis, home prices declined in March in 18 out of 20 metro areas (all but Washington, D.C. and Seattle), and the drop was less than or equal to 1% for 10 regions on a seasonally unadjusted basis. According to the S&P/Case-Shiller index, home prices in Atlanta, Chicago, Boston, Detroit, Minneapolis, Charlotte, N.C., Las Vegas, and Cleveland decreased more than 1% on a seasonally unadjusted basis in March. Overall, Minneapolis (3.7%) declined the most during the month.


• On a year-on-year basis, home prices declined in 19 out of 20 metro areas in March. Washington, D.C. was up 4.3% from a year earlier. The largest year-on-year declines were in Minneapolis (10.0%) and Phoenix (8.4%).


• Home price indices in 12 metro areas posted new lows in March since reaching their mid-2006 peak.


• The values of the S&P/Case-Shiller 10- and 20-City composite indices are currently near their early-to-mid-2003 levels. These indices peaked around mid-2006 and have since lost about 32.6% and 33.1% of their values, respectively. Both indices currently remain near their early 2009 lows. However, the 20-City index fell slightly below its 2009 bottom in March 2011, hitting a new low.


• Home prices in Detroit are 32.9% below their 2000 levels, and home prices in Atlanta, Cleveland, and Las Vegas are slightly below their 2000 levels.

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