U.S. Home Prices Tumble 4.5% in June

By Steve Schaefer
Forbes
August 30, 2011

A closely-watched gauge of U.S. housing was down sharply from a year ago in June, but the measure of home prices across the country is showing signs that the deterioration in the market is slowing.

The S&P/Case-Shiller index of home prices in 20 major cities was down 4.5% in June from a year ago, a hair less than the 4.6% annual decline in May. Nineteen of the 20 cities showed improvement from May – Portland was flat – while 12 showed a third-consecutive monthly increase. Perhaps more importantly, even the cities that saw the biggest year-over year declines – Minneapolis (-10.8%) and Portland (-9.6%) – did not make fresh lows.
11 images Gallery: 10 Big Cities Where Buying Is Cheaper Than Renting
15 images Gallery: Where Home Prices Are Making A Comeback

On a national scale, S&P/Case-Shiller reported home prices were down 5.9% in the second quarter from the corresponding three-month period in 2010, but up 3.6% from the previous quarter.

S&P Indices’ David Blitzer, chairman of the index committee, said eight cities bottomed in 2009 (California cities plus Dallas, Denver and Washington D.C.), while five set fresh lows in 2011 (Las Vegas, Miami, Phoenix, Tampa and Detroit). “These shifts,” Blitzer said, “suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together. (See “Ryland Pulls Up Stakes In Jacksonville, Dallas.”)

The housing recovery has proceeded at a snail’s pace, largely due to the lack of substantial employment growth – August’s nonfarm payrolls due out Friday are expected to add just 75,000 jobs – but also factors like the foreclosure overhang that is keeping a lid on prices and sales. (See “U.S. Cities Where Buyers Do Better Than Renters.”)

Much-maligned banks are also a factor, with many still working through mortgage issues from the housing bubble and exercising far stricter lending standards. Just Monday, the FDIC objected to Bank of America’s proposed $8.5 billion settlement with investors in mortgage-backed securities sold by its subsidiaries. The latest delay to BofA’s efforts to put mortgage issues in the rearview mirror is just one example of how conditions are tilted against a big comeback for housing anytime soon.

Home builders and retailers that have substantial exposure to housing – Home Depot and Lowe’s being the two biggest examples – were a mixed bag Tuesday. The retailers started the day in the red, while builders like KB Home and PulteGroup shot up more than 5% apiece. (See “Toll Brothers: Thanks For Nothing Mr. Market.”)

The broader market opened modestly lower Tuesday, with the Dow Jones industrial average off 27 points to 11,513, the S&P 500 5 points to 1,206 and the Nasdaq 8 points to 2,554.