USA Today
NEW YORK (AP) — U.S. home prices fell at a record pace in the second quarter compared with a year ago, according to two separate reports out Tuesday, but investors combed through them and found some reasons to hope the worst is over for the moribund housing sector.
A third report said sales of new single-family homes in July were lower than economists expected but rose from a June pace that was the slowest in nearly 17 years.
The Standard & Poor’s/Case-Shiller U.S. National Home Price Index tumbled a record 15.4% during the quarter from the same period a year ago, but the data for June suggest the severity of the housing slump may be waning.
The monthly indexes also clocked in record declines. The 20-city index fell 15.9% in June compared with a year ago, the largest drop since its inception in 2000. The 10-city index plunged 17%, its biggest decline in its 21-year history.
However, the rate of single-family home price declines slowed from May to June, a possible silver lining, the index creators said.
“While there is no national turnaround in residential real estate prices, it is possible that we are seeing some regions struggling to come back, which has resulted in some moderation in price declines at the national level” said David Blitzer, chairman of the index committee at S&P.
Fourteen cities in the monthly index showed improvement from May to June, and nine recorded positive returns.
The index’s glimmer of hope follows another surprisingly positive housing headline on Monday. Existing home sales rose in July, surpassing expectations, as buyers snatched up cheap distressed properties in the hardest hit housing markets.
Still, on a year-over-year basis, no city in the Case-Shiller 20-city index saw price gains in June, the third straight month that’s happened.
Las Vegas led the largest annual declines, falling 28.6% followed by Miami at 28.3% and Phoenix at 27.9%.
Charlotte, the last city in the index to report depreciation during the current housing downturn, posted its largest drop since 1991 at 1%.
The government home price index for the April-June period, released by the Office of Federal Housing Enterprise Oversight, focuses on less expensive properties and includes fewer houses bought with risky loans that soured over the past year, but it also hit a record.
Home prices fell 4.8% in the second quarter compared with a year ago, OFHEO said.
The previous record annual drop in the index’s 17-year history was 3%, set in the January-March period of this year.
The government index also fell 1.4% from the first quarter to the second quarter. That was a smaller drop than the record quarterly decline of 1.7% set in the prior period.
As the housing market has crashed over the past year, the most severe price declines have been in Western states. California‘s prices fell nearly 16%, while Nevada‘s prices fell 14%.
Also showing big price declines were: Florida, where prices fell 12%; Arizona, where they fell 9%; and Rhode Island, where they fell 5%.
The government’s state-by-state figures include refinance transactions.
“The most overbuilt areas of the country — including California, Nevada, Arizona and Florida — contrast greatly with most other states, where prices are declining more moderately or even increasing,” OFHEO Chief Economist Patrick Lawler said in a statement.
Prices in the weakest markets, he said, have receded to late-2005 levels, plummeting by more than 30% in two cities: Merced and Stockton, Calif.
OFHEO regulates the government-sponsored mortgage finance companies, Fannie Mae and Freddie Mac. Under the housing bill signed by President Bush last month, its functions will be folded into a new agency, the Federal Housing Finance Agency.
New-home sales rose 2.4% last month to a seasonally adjusted annual rate of 515,000 units, the most since April.
But sales in June turned out to be much weaker than the government previously estimated. Sales sank to a pace of just 503,000, the worst showing since September 1991.
Economists polled by Reuters were expecting to sales to remain unchanged at the 530,000 annual pace first reported for June. 1.
The inventory of homes available for sale shrank 5.2% to 416,000, the lowest since October 2004. The July sales pace put the supply of homes available for sale at 10.1 months’ worth.
The median sales price rose slightly to $230,700 from $230,100 from June, but was down 6.3% from a year earlier, the government said.
Compared with a year ago, home sales were off 35.3%. Only Northeast sales rose from a year earlier, up 4.2%, while all other regions had double-digit declines.
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