Record National Home Price Plunge

By one measure, national home prices dipped by record levels. By other measures, not so much. Three new reports are grim, but also reveal what could be a regional shift for the next boom as ever-lower prices appear to be attracting a new round of buyers.

by Broderick Perkins
© 2008 DeadlineNews.Com

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Deadline Newsroom - Single-family home prices tumbled a record 15.4 percent in the past year overall in nine census districts, according to a home price index that also reveals even larger busts in indexes covering smaller market samples.

However, the S&P/Case-Shiller Home Price Index and other reports released this week, indicate the market is inching nearer to the bottom and some markets, including the West South Central Division, may already be in a growth mode.

Data through June from Standard & Poors' S&P/Case-Shiller Home Price Index, a look at all nine U.S. Census divisions, revealed a continued double-digit run on home price droops. Prices were down 14.2 percent in the first quarter. The index uses repeat sales pricing to measure housing values.

The index's smaller 20-City Composite index was down more, by 15.9 percent during the second quarter. Still smaller, the 10-City Composite index tumbled even more, by 17 percent.

The report is among a flurry of home price surveys released this week.

The National Association of Realtors reported Monday, in its broader survey of closed sales on existing-homes of all housing types, that the July median price of $212,400, dropped 7.1 percent compared to a year ago when it was $228,600.

The Office of Federal Housing Enterprise Oversight's second quarter Home Price Index of the average price of sales and refinancings of the same single-family homes, reported prices down 4.8 percent, compared to last year. The decline is the largest in the purchase-only index's 17-year history, but much smaller than other indexes.

"Tighter credit conditions and relatively high inventory levels led to some sharp price declines in the second quarter," said OFHEO director James B. Lockhart.

The good news is, "However, the majority of Metropolitan Statistical Areas (MSAs) posted positive four-quarter growth," he added.

David M. Blitzer, Chairman of the Index Committee at Standard & Poors agrees.

"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," Blitzer said.

He added, "Depending on where you focus on the details of the report, you can see some different stories on where home prices are headed. Record year-over-year declines were reported in both the 10-City and 20-City Composites in June; however, they are very close to the values reported for May."

S&P/Case-Shiller reported, at the national level, the housing market peaked around June and July of 2006. By June 2008, two years later, the 10-City Composite had fallen by 20.3 percent and the 20-City Composite was down 18.8 percent.

Las Vegas remained the weakest market in its report, with an annual decline of 28.6 percent, followed by Miami and Phoenix, down 28.3 and 27.9, respectively.

OFHEO found bright spots in 12 states where, for purchases only, prices increased over the past four quarters. And in the West South Central Division, the purchase-only price rose by 2.3 percent during the same period. However, prices declined in all of the other divisions.

In the not-so-bright spots, OFHEO said California, Florida, and Nevada were the worst performers with prices falling 15.8 percent; 12.41 percent; and 14.12 percent, respectively. Twelve of the bottom performing cities were in California, many of them in the Central and Imperial Valley areas and many of them with 1-year home price declines ranging from 20 percent to a whopping 35 percent.

The Pacific Census Division, the worst-performing division, experienced a seasonally-adjusted quarterly price decline of 16.4 percent for the past 12 months.

However, OFHEO also found 20 larger metro areas with 1-year home price increases of 4.5 percent or more including, Houma-Bayou Cane-Thibodaux, LA (up 9 percent); Decator, AL (up 6.44 percent); Charleston, WV (5.99 percent); Greenville-Mouldin-Easley, SC (up 5.78 percent); and Idaho Falls, ID (5.27 percent), at the top of the heap.

Among smaller metro areas, Wheeling, WV was on top with a 1-year 12.32 percent increase in home prices; Longview, TX was up 10.49 percent; Johnstown, PA, up 9.62 percent; Hinesville-Fort Stewart, GA up 8.53 percent and Midland, TX up 8.81 percent.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the new Deadline Newsroom, DeadlineNews.Com's news back shop. In both cases, it's where all the news really hits home.

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