Slumping Home Prices Signal Post-Tax Credit Weakness

Reduced home pricesHome prices remain above levels of a year ago, but a key national index shows a dip in the first quarter of 2010 compared to the end of last year, signaling a weakening in the fragile housing market as tax incentives come to an end.
Through March 31, 2010, Standard & Poor’s said its measure of U.S. home prices fell 3.2 percent in the first quarter of 2010, with 13 of 20 cities showing declines.  The S&P/Case-Shiller Home Price Indices focus on the 20 largest metropolitan areas.
On a seasonally adjusted basis, the 20-city index was unchanged in March from February. Unadjusted, it dropped 0.5 percent from February, the sixth consecutive decrease.
Compared to March of 2009, prices nationally were up 2 percent.
Homebuyer tax credits of up to $8,000 expired April 30, having boosted home sales in March and April – but apparently not having much impact on home prices.
Analysts already are projecting a dip in home sales for the summer months as an aftermath of the tax-credit effect on the market.
“The housing market may be in better shape than this time last year; but, when you look at recent trends there are signs of some renewed weakening in home prices,” says David M. Blitzer, chairman of the Index Committee at Standard & Poor’s. “In the past several months we have seen some relatively weak reports across many of the markets we cover.”
In March, 13 of the 20 metro areas saw a decline compared to February. Boston was flat. Eight cities posted new index lows in March – Atlanta, Charlotte, Chicago, Detroit, Las Vegas, New York, Portland and Tampa.
Las Vegas and Phoenix have “peak-to-current declines” of 56.3 and 51.8 percent, respectively.
On the positive side, Los Angeles, Minneapolis, San Diego and San Francisco have shown recovery from recent lows of +7.2 percent, +7.4 percent, +10.9 percent, and +16.2 percent, respectively.
San Diego stands out with 11 consecutive months of increasing home prices.
See Related Articles:

Leave a Reply

Your email address will not be published. Required fields are marked *