August Home Prices Gain, Boston Among Leaders

David M. BlitzerHome price declines across the country continued to moderate in August, according to the latest release of the S&P/Case-Shiller Home Price Index. This marks seven months of improvments in these statistics, beginning in early 2009. (See Home Prices chart.)

“Broadly speaking, the rate of annual decline in home price values continues to improve” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s.

Year-over-year, all 20 metro areas surveyed continued declining prices. But 19 of the 20 showed a slight increase in August over July. Many have had several such monthly gains. Boston has had a string of such gains, beginning in April, and once again was among only four with annual declines below 5%.

The home buyer tax credit extension and expansion could help sustain this positive trend. Weighing against it, course, are anticipated higher unemployment rates, and a possible increase in foreclosures.

From the peak in the second quarter of 2006 through August 2009, a composite index of the 20 metro areas surveyed had declined about 30%, returning to price levels not seen since autumn of 2003. By contrast, metro Boston had declined about 15% from its September 2005 peak, through August 2009, for an average annual loss rate of 3.6%.

The S&P/Case-Shiller Home Price Index records repeat sales of single-family homes, allowing it to avoid distortions due to changes in the sales mix over time. The Index has a two-month lag, that is, August is reported in October.

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2 Responses to August Home Prices Gain, Boston Among Leaders

  1. Jeff Persons says:

    I must take exception to the following: “Year-over-year, all 20 metro areas surveyed continued declining prices. But 19 of the 20 showed a slight increase in August over July. Many have had several such monthly gains. Boston has had a string of such gains, beginning in April, and once again was among only four with annual declines below 5%.”

    I have no doubt that this is true but I’m here to say that these stats, if not meaningless, lack rigor. The seven months of improving numbers parallel the annual spring cyclicality of the real estate market so the statement “This marks seven months of improvements in these statistics, beginning in early 2009.” could be stated every year in one way or another.

    The truth is most real estate people are going to predict what they want to happen or what they wish would happen so they grab some data that may support a guess about the market direction.

    I’ve had enough of that hubris, or call it posturing.

    The home buyer tax credit is responsible for this trend. Its a positive trend but its being compared to very negative numbers. All it means is that there is a slowing rate of decline.

    I for one have resolved to stop guessing as its all posturing and ego-tripping. In a market anything can happen and usually the thing that makes the largest number of market participants wrong is what happens anyway.

    • Ron Cohen says:

      Hi Jeff,

      Thanks for the thoughtful comment. On the seasonality question, I follow the original, non-seasonally-adjusted S&P/Case-Shiller Index, as do many economists. But if you look at the newer, seasonally adjusted version of the Index, you’ll see that the statements I made still largely hold up. Boston, for example, still showed a “string” of month-to-month improvements beginning in April.

      Certainly, it was expected the home buyer tax credit would support gains in the housing market, as my post suggests, but I don’t know if it’s accurate to say that it is “responsible” for the trend. Early signs of the price gains were already in evidence when President Obama signed the first tax credit on February 17. I invite you to visit my Market Trends page, and scroll down to the two Home Prices charts for a quick visual overview.

      Yes, you’re right, what we’re seeing is a slowing rate of decline. Hopefully, the gains will continue, and the rate curve will punch through neutral into positive territory sometime in the middle of 2010.

      Regards,
      Ron Cohen

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