Case-Shiller Shows Home Prices Still Falling but More Slowly

Home prices are continuing their descent in 2012, reaching a 10-year low in February, according to the S&P/Case-Shiller Index, while new home sales also fell in March, the Census Bureau reported. But the annual rate of decline in home prices showed modest improvement from January, hinting that prices may be beginning to stabilize. And new home sales remained well above 2011's estimates.

In a 20-city composite, home prices for February 2012 fell 3.5 percent annually, a slight improvement from January's 4.1 percent annual decline, the Case-Shiller index shows. Fifteen of 20 metro areas posted better annual returns than in January. New home sales in March 2012 fell 7.1 percent below a revised February 2012 rate of 353,000 to 328,000, but still were 7.5 percent above the March 2011 estimate of 305,000.

"While there might be pieces of good news in this report [the Case Shiller Index], such as improvement in many annual rates of return, February 2012 data confirm that, broadly speaking, home prices continued to decline in the early months of the year," chairman of the index committee David M. Blitzer said in a statement.

A Hobbled Housing Market

Overall, the data continues to reflect a housing market that is slogging along to a slow recovery, as a glut of distressed properties, tight lending conditions and high unemployment continue to stifle the market.

"The bottom line is that builders in many markets are reporting more interest among prospective buyers, with the main sticking points for sales right now being access to credit for builders and buyers, and problems with obtaining accurate appraisals," National Association of Home Builders chairman Barry Rutenberg said in a statement that offered his take on the new home sale numbers.

Chief economist of listing service Trulia, Jed Kolko, says the Case-Shiller Index's February numbers come as relatively positive news for the housing market, however. He says that some indices, which gauge home-price movements based on asking prices, suggest that the market improvement shown by Case-Shiller -- which he says actually reflect prices in the fall of 2011 -- should continue until prices actually rise. The Trulia Price Monitor, an index that Kolko has helped develop, shows that prices bottomed out sometime in January, he says.

"Asking prices started stabilizing in September, according the Trulia Price Monitor, and rose in February and March," he wrote in an email. "We should see Case-Shiller reporting bigger month-over-month price increases this summer. Strong spring demand, helped by the recovering economy, and tighter inventories will together finally give prices a lift."

Traditional indices such as the Case-Shiller Index usually reflect home prices that are at least three months old because they measure prices after a home sale is finalized. Sale prices aren't established until about two months after homebuyers sign home-purchase contracts, and on top of the two-month lag, indices usually take at least four weeks to process the sales data.

Though housing bellwethers have been painting a rosier picture of the housing market over the last few months, the most recent data have suggested that progress may be stalling. Existing home sales and construction on new homes fell marginally in February, while builder confidence slipped in April, marking a drop from its highest level since 2007.

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