The New Year Didn't Change the Downward Spiral of Residential Real Estate Prices According to the S&P/Case-Shiller Home Prices Indices

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(News Source: Standard & Poor's)

(NEW YORK, NY) -- Data through January 2009, released today by Standard & Poor's for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, shows continued broad based declines in the prices of existing single family homes across the United States, with 13 of the 20 metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10% versus January 2008.


The chart above depicts the annual returns of the 10-City Composite and the 20-City Composite Home Price Indices. Following the lead of the 14 metro areas described above, the 10-City and 20-City Composites also set new records, with annual declines of 19.4% and 19.0%, respectively.

"Home prices, which peaked in mid-2006, continued their decline in 2009," says David M. Blitzer, Chairman of the Index committee at Standard & Poor's. "There are very few bright spots that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the MSA's falling more than 20% in the last year.  Indeed, the two composites are very close to that rate and have been reporting consecutive annual record declines since

October 2007. The monthly data follows a similar trend, with the 10-City and 20-City Composite showing thirty consecutive months of negative returns."


The chart above shows the index levels for the 10-City Composite and 20-City Composite Home Price Indices. As of January 2009, average home prices across the United States are at similar levels to what they were in late 2003. From the peak in the second quarter of 2006, the 10-City Composite is down 30.2% and the 20-City Composite is down 29.1%.

All 20 metro areas are reporting negative monthly and annual rates of change in average home prices. Seven metro areas and the 20-City Composite recorded a record monthly decline in January. In addition, seven metro areas (not always the same seven) reported declines in excess of 4% in the month of January alone. Phoenix led with a report of -5.5%.  Every MSA has had at least five consecutive months of decline, dating back to September 2008. On a marginally positive note Cleveland, Los Angeles and Las Vegas are reporting a relative improvement in year-over-year returns, in terms of lesser rates of decline than last month's values. Furthermore, Las Vegas, along with five other metro areas, showed a marginal improvement in monthly returns, albeit still negative.

The three worst performing cities, in terms of annual declines, continue to be from the Sunbelt, each reporting negative returns in excess of 30%. Phoenix was down 35.0%, Las Vegas declined 32.5% and San Francisco fell 32.4%. Dallas, Denver and Cleveland faired the best in terms of annual declines down 4.9%, 5.1% and 5.2%, respectively.

Looking at the data from peak-thru-January 2009, Dallas is the least hurt, down 10.8% from its peak in June 2007, while Phoenix is down 48.5% from its peak in June of 2006. The rates of decline from the individual heights of each market are evidence of how much each market has taken back in terms of the gains earned in the past 10-15 years. All of the 20 metro areas are in double digit declines from their peaks, with nine of the MSA's posting declines of greater than 30% and five of those (Las Vegas, Miami, Phoenix, San Francisco and San Diego) in excess of 40%.

The table below summarizes the results for January 2009. The S&P/Case-Shiller Home Price Indices are revised for the 24 prior months, based on the receipt of additional source data. 

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