Case-Shiller: Home Prices Show Seasonal Strength, Down From Last Year

Even with a seasonal uptick in the month of July, home prices are falling short of their levels a year earlier, according to data released Tuesday morning by Standard & Poor’s. Both the 20-city and 10-city composite readings of the S&P/Case-Shiller index rose 0.9 percent between June and July, but were down 4.1 percent and 3.7 percent, respectively, when compared to July 2010. Washington, D.C. and Detroit were the only metropolitan areas to buck the annual trend. In the nation’s capital city, home prices are up 1.3 percent from July of last year. Motor City posted a positive annual rate of change of 0.3 percent. While most markets are struggling to return to their year-ago levels, there are some having trouble treading water even when comparing the short-term stats. Seventeen of the 20 metros covered by the Case-Shiller study saw positive monthly increases in July. However, Las Vegas and Phoenix were down for the month and Denver was unchanged. The S&P/Case-Shiller index has recorded month-over-month increases in home prices overall for four consecutive months (April-July), reflecting the typical movement that accompanies the spring and summer homebuying seasons. S&P’s David Blitzer sees positives in the data even beyond that. “With July’s data we are seeing not only anticipated monthly increases, but some fairly broad improvement in the annual rates of change in home prices,” said Blitzer, who is chairman of the index committee at S&P Indices. “This is still a seasonal period of stronger demand for houses, so monthly price increases are expected and were seen in 17 of the 20 cities….The better news is that 14 of 20 cities and both composites saw their annual rates of change improve in July,” Blitzer said. The latest Case-Shiller results were in line with market expectations. Galen Ward, CEO of the real estate brokerage web site Estately.com points out that last year’s summer buying season ended earlier than usual as buyers rushed to close before June 30 to take advantage of the federal government’s homebuyer tax credit incentive. “All that extra buying activity…right before the tax credit deadline drove up home prices, so it makes sense that we’re still seeing a year-over-year decline. Remember, the July Case-Shiller covers a rolling average of May, June, and July sales prices,” Ward said. He also noted that the slight monthly increase recorded in the composite readings is likely related to the number of foreclosure filings, which have been consistently declining month-over-month. RealtyTrac shows a 4 percent drop in foreclosure filings for July when compared to June. “Since foreclosures tend to sell for less than non-distressed properties, average home prices go up in concert with a drop in foreclosure listings,” Ward explained, adding that “a slight rise in home values for July is also in step with the Consumer Confidence Index, which rose slightly to 59.5 from June’s 57.6.” Dr. Stan Humphries, chief economist for the online mortgage marketplace Zillow, pegged the July Case-Shiller results very close to their actual readings. Humphries issued a forecast on Monday just before the Case-Shiller release. He projected a 1.2 percent gain month-over-month for the 20-city composite and a 4 percent decline year-over-year. Humphries notes that “the market is full of conflicting signals right now.” Still, he believes the numbers will show weaker housing performance in the back half of this year, dampened by concerns over global economic crises, weak employment growth here in the states, and low consumer confidence. “Looking ahead, expect fading monthly momentum in Case-Shiller,” Humphries said.