Home Prices Up 3.6% in Q2 2011: S&P Indices

August 31, 2011 / Russell Legato, Residential Property Analyst

Home prices in USA have increased by 3.6 percent in the second quarter of 2011 after having fallen 4.1 percent in the first quarter, though posting an annual decline of 5.9 percent versus the second quarter of 2010, according to S&P’s Case-Shiller1 Home Price Indices.

Home Prices Up 3.6% in Q2 2011: S&P Indices

“Nationally, home prices are back to their early 2003 levels. As of June 2011, 19 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were up versus May – Portland was flat,” S&P said in a statement.

However, the Indices showed they were all down compared to June 2010.

On the other hand, a foreclosure sales report released by online marketplace for foreclosure homes, RealtyTrac, showed that homes in short sales or bank owned have accounted for 31 percent of all U.S. residential sales in the second quarter of 2011, down from 36 percent of all sales in the first quarter, though up from 24 percent of all sales in the second quarter of 2010.

Twelve of the 20 MSAs and both Composites were shown to have increased for three consecutive months, “a sign of the seasonal strength in the housing market” according to S&P. The June report did not show new lows, though Minneapolis posted a double-digit 10.8 percent annual decline, while Portland is not far behind at -9.6 percent.

Thirteen of the cities and both composites saw improvements in their annual rates. But S&P said they all are
in negative territory and have been so for three consecutive months.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 5.9 percent decline in the second quarter of 2011 over the second quarter of 2010.

In June, the 10- and 20-City Composites posted annual rates of decline of 3.8 percent and 4.5 percent, respectively. Thirteen of the 20 MSAs and both monthly Composites saw their annual growth rates improve, although remaining in negative territory in June.

“This month’s report showed mixed signals for recovery in home prices. No cities made new lows in
June 2011, and the majority of cities are seeing improved annual rates. The National Index was up 3.6 percent
from the 2011 first quarter, but down 5.9 percent compared to a year-ago,” says David Blitzer, Chairman of
the Index Committee at S&P Indices.

“Looking across the cities, eight bottomed in 2009 and have remained above their lows. These include all the California cities plus Dallas, Denver and Washington DC, all relatively strong markets. At the other extreme, those which set new lows in 2011 include the four Sunbelt cities – Las Vegas, Miami, Phoenix and Tampa – as well as the weakest of all, Detroit. These shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together.

“As with May’s report, June showed unusually large revisions across the same MSAs – Detroit, New York, Tampa and Washington DC. Our sales pairs data indicate that, once again, these markets reported a lot more sales closing in prior months, which caused the revisions. Since deed recording is usually county based, if the price trends across counties are very different, then delays from a subset of counties can lead to larger revisions. And data lag lengths tend to vary across the counties within a metro area. If counties with relatively stronger/weaker markets report sales with longer/shorter lags, this will result in larger revisions as we receive the lagged data.”

Revisions are also likely to be larger when sales volumes are low or the proportions of distressed/non-distressed sales are changing rapidly, Blitzer added.

“Nineteen of the 20 MSAs and both Composites were up in June over May. Portland was flat. Cleveland has improved enough that average home prices in this market are back above its January 2000 levels. Only Detroit and Las Vegas remain below those levels.”

As of the second quarter of 2011, average home prices across the United States are back at their early 2003 levels. The National Index level had hit a new low in the first quarter of 2011; but recovered by +3.6 percent in the second quarter, though still 5.9 percent below its 2010Q2 level.

Twelve cities and both Composites have posted three consecutive months of positive month-over-month returns. Eleven of the 20 cities were up 1 percent or more.

Articles other readers have found interesting...

Top News Stories:

Leave a Reply