Home Prices Fall Further in August

A key gauge of home prices dropped nearly 17 percent in August from a year earlier.

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The S&P/Case-Shiller Home Price Indexes, which were released Tuesday, showed that home prices continued their painful declines in August. The 20-City Composite Index recorded an annual decline of nearly 17 percent.

From the report:

Nine of the 20 regions have record annual declines. Phoenix and Las Vegas are now returning -30.7% and -30.6% versus August 2007, respectively. Each of the California markets--Los Angeles, San Francisco, and San Diego—are down more than 25% from their values 12 months ago. Miami and Tampa, the two Florida markets, are down 28.1% and 18.1%, respectively.

For the August/July period only 2 regions, Cleveland and Boston, had positive returns. Cleveland returned +1.1% and Boston returned +0.1%. Boston has had positive monthly returns for each of the past five months. Dallas and Denver's streaks of 4+ straight positive returning months ended in August. San Francisco was the biggest decliner for the month returning -3.5%. This worsened from its July/June return of -1.8%. From August 2007 to August 2008, Dallas and Charlotte have the best relative performance. Dallas is down 2.7% over the year and Charlotte is down 2.8%.

The good news?

From a report by David Ressler, chief economist at Nomura Securities:

The rate of decline may be stabilizing, however. In seven of 20 cities, 12-month price declines were slower than in July. Moreover, 11 of 20 cities may have seen their maximum 12-month declines. However, prices in the "sun-belt" locations that have been at the leading edge of both the housing bubble and its subsequent implosion continue to fall rapidly. S&P economist David Blitzer noted that the accelerating rate of decline in those sun-belt markets can be attributed to the deep price cutting associated with foreclosures. Other cities, where the price bubble was smaller, may be nearer a price floor but the downturn in the overall economy since the coverage of this report is likely to keep prices weak in all markets.

The bad news?

From economists at Goldman Sachs:

Note, however, that these data precede whatever impact the seize-up in financial markets beginning in mid-September may have had on the resale market for homes.