U.S. home prices fell at slower pace in May
The U.S. housing sector's long, slow journey back to health continues. U.S. home prices in 20 cities declined at a 17.1 percent annual pace in May -- a smaller decline than April's 18.1 percent fall -- according to the S&P/Case-Shiller U.S. National Home Price Survey.
Economists surveyed by Bloomberg News had expected the S&P/Case-Shiller Home Price Index to fall 17.9 percent in May.
May data: 'a better tone'
"Overall, there's a better tone to this month's report," Economist Andrew Hill told DailyFinance Tuesday. "The U.S. home sector appears to be stabilizing and the inventory of unsold homes is starting to fall. More non-foreclosure sellers are matching buyers' prices and that's usually one of the first signs of a housing bottom."
The areas with the largest annual percentage declines were: Phoenix, -34.2 percent, Las Vegas, -32.0 percent, San Francisco, -26.1 percent, Miami, -25.2 percent, and Detroit, -24.5 percent.
Year-over-year percentage price changes in other, major U.S. cities were as follows: New York, -12.2 percent, Chicago, -17.5 percent, Boston, -7.2 percent, Washington, D.C., -14.9 percent, Atlanta, -15.0, percent, Tampa, -20.8 percent, Dallas, -4.1 percent, Denver, -4.6 percent, and Seattle, -16.6 percent.
Originally greeted by Wall Street with a shrug, S&P/Case-Shiller home price data rose to market-mover status in 2008 as it became clear that the United States' housing boom during the past decade was, in fact, a bubble fueled considerably by mortgage market excesses, from borrower to lender. The bursting of that bubble triggered record home mortgage foreclosures and mortgage-backed securities defaults (toxic assets), which led to the financial crisis that the U.S. and world are still trying to end today.
As a result, investors, economists, home builders, and homeowners alike now closely monitor Case-Shiller home price data in order to discern clues as to when the housing slump may end -- a recovery that historically has contributed to U.S. GDP growth.
Housing Sector Analysis: Notch another small victory for the U.S. housing sector. Price declines in 20 major cities are decelerating -- something that S&P Index Committee Chairman David M. Blitzer called "a clear inflection point in the year-over-year data." Still, investors -- and certainly potential home buyers -- should not conflate these figures with a bullish home sector: it's not. The housing sector remains in recession, with high inventories (magnified by foreclosures), and too few buyers, due to low household formation. That said, the past four months of data point to a bottom in housing, with the strength of its rebound to be determined in large part by the strength of the overall U.S. economy's recovery, including job growth.