Case-Shiller Home Price Index

If only they sold a GPS system for the real estate market. (Can somebody get on that?) It sure would help in determining precisely where the housing market is, and where it is headed. Though the exact answers to those questions remain uncertain, the latest numbers indicate further improvement and stabilization.

What are the facts?

Nationally:

• The October housing inventory reached a 7 months’ supply, down from 8 months in September. (A 6 months’ supply is considered a balanced market)
• New-home starts dropped by a seasonally adjusted rate of 10.6%. New-home inventories are at the lowest levels since 1982, which is helping to liquidate the existing-home inventory and bring it back to normalcy.
• The median sale price of existing homes declined 7.1% from October 2008, which was a lower rate than the 8% year-over-year decline in September.
• Mortgage rates are incredibly low, with 30-year loans averaging around 4.8% and 15-year loans around 4.3%.
• As of the 3Q of 2009, average home prices across the U.S. are at similar levels to what they were in the fall of 2003. The latest numbers show improvement over Q1 and Q2 of 2009, and have risen well off their recent bottom. (See chart below.)

Locally:

• DFW’s existing-home prices stayed steady from September to October, according to the latest Standard & Poor’s / Case-Shiller Home Price Index.
• Foreclosure filings for the upcoming December foreclosure auctions are down 12% in Dallas County when compared to the same period last year, reports the Dallas Business Journal.
• Dallas saw an annual home price decline of only 1.2% from October 2008. (See chart below)
• Dallas tied Denver for the U.S. markets with the smallest annual price decline.

Due to variables such as the temporary tax credit and the fragile labor market, the future trajectory of the housing market is not entirely clear. Nonetheless, we have reason to be thankful today: the graphs are pointing in the right direction.

For more information, see dallasnews.com, businessweek.com, dallas.bizjournals.com, and realestatechannel.com.

The S&P/Case-Shiller home price indexes were released this morning, showing that home prices rose for the fourth month in a row and suffered only a small annual drop.

After climbing 1.6% in July, home prices took another 1.2% step forward in August.  Though prices were down 11.3% from August 2008, analysts had predicted an 11.9% drop and were thus somewhat relieved. “Broadly speaking, the rate of annual decline in home price values continues to improve,” said David Blitzer, chairman of at Standard & Poor’s index committee. The annual rate of decline of the 10-City and 20-City Composites has improved for seven consecutive months.

Dallas home prices experienced a 0.2% increase from July to August, and a 1.2% decline from August 2008.

Some economists predict that home prices will soon take another dip, especially if the tax credit ends in late November. “Once the tax credit expires, demand will take a hit, home sales will drop and house prices will resume their downward course, brought down by the weight of rising foreclosures and rising unemployment rates,” writes Patrick Newport, an economist at IHS Global Insight.. “Our view is that home prices will drop another 5%….and will bottom in 2010.”

Though the future is still unknown, today’s report indicates a small step in the right direction.