Home prices in 10 major U.S. cities dropped at the fastest pace in 16 years during the 12 months ending in April, according to Standard & Poor's Case-Shiller home price index released Tuesday.
Home prices in the 10 cities fell 2.7% on a year-over-year basis, the largest decline since September 1991. Meanwhile, prices in 20 cities dropped a record 2.1% year over year.
Price appreciation has slowed for 17 consecutive months. Nationally, prices have doubled since 2000.
Fourteen of the 20 cities showed falling prices in the past year, led by Detroit (down 9.3%), San Diego (down 6.7%) and Washington (down 5.7%). Seattle had the largest price gains over the past year at 9.6%, while prices are up 7% in Charlotte, N.C., and 6.4% in Portland, Ore.
"No region is immune to weakening price returns," said Robert Shiller, chief economist for MacroMarkets LLC and the co-creator of the index. Even in regions such as the Pacific Northwest or the Southeast, where prices are still rising, the gains have been slowing.
# Atlanta: up 0.8% in April, up 2.1% year-on-year
# Boston: up 0.6% in April, down 4.5% year-on-year
# Charlotte: up 1.2% in April, up 7% year-on-year
# Chicago: down 0.7% in April, up 0.2% year-on-year
# Cleveland: down 0.2% in April, down 2.8% year-on-year
# Dallas: up 1.3% in April, up 2% year-on-year
# Denver: up 0.5% in April, down 1.8% year-on-year
# Detroit: down 2.5% in April, down 9.3% year-on-year
# Las Vegas: down 0.8% in April, down 3% year-on-year
# Los Angeles: down 0.5% in April, down 2.6% year-on-year
# Miami: down 1.2% in April, down 1% year-on-year
# Minneapolis: down 0.5% in April, down 2.9% year-on-year
# New York: down 0.2% in April, down 1.5% year-on-year
# Phoenix: down 0.8% in April, down 4.5% year-on-year
# Portland: up 1% in April, up 6.4% year-on-year
# San Diego: down 0.3% in April, down 6.7% year-on-year
# San Francisco: up 0.2% in April, down 2.8% year-on-year
# Seattle: up 1.3% in April, up 9.6% year-on-year
# Tampa: down 1.1% in April, down 5% year-on-year
# Washington: down 0.5% in April, down 5.7% year-on-year
# 10-city composite: down 0.3% in April, down 2.7% year-on-year
# 20-city composite: down 0.2% in April, down 2.1% year-on-year
Also From Marketwatch:
U.S. new home sales fell 1.6% in May after surging in April to a seasonally adjusted annual rate of 915,000 units, the Commerce Department said Tuesday. Economists expected sales to fall to 930,000 units. At the same time, sales in February, March and April were revised down by 84,000 units. April's sales pace was revised to 930,000 units from the 981,000 units initially reported, a 12.5% rise from March's downwardly revised 827,000 annual pace. This is still the largest sales increase since September 1993. New home sales are down 15.8% in the past year. Inventories of unsold homes fell 1.1% to 536,000, representing a 7.1-month supply at the May sales pace. The supply of inventory peaked at 8.3 months in March. Inventories of unsold homes are down 5% in the past year. The median sales prices fell 0.9% in the past year to $236,100.
There is absolutely nothing good in any of these reports. Declining sales and prices + high inventory levels + lower earnings from homebuilders + bearish forecasts from homebuilders = a really bad situation in the housing market. And it's just getting worse.
I want to add the following questions.
So far, the US housing market problems have not bled over into consumer spending. In addition, while we have seen subprime lenders go bankrupt at high rates, a decline in housing stocks, a huge pile-up in new and existing homes inventory for sale and now a hedge fund with exposure to subprime mortgages having big problems. However, the economy at large is still operating fairly well.
Here's the question: how much stress can the US economy take from housing? It's already taken a lot. But -- where's the breaking point? The more the negative housing news piles up the closer we get.
