Home sale prices drop 3.2% in U.S.
A much-watched report Tuesday showed U.S. home prices declining at their fastest pace in two decades, signaling that the nation’s housing slump was worsening during what is normally the best time of year for residential real estate.
Home prices dropped 3.2% in the second quarter compared with the same period last year, according to the S&P;/Case-Schiller quarterly index, which tracks existing single-family home price trends in major metropolitan areas.
It was the worst decline in the 20 years since the price barometer was inaugurated, said Robert Shiller, chief economist for MacroMarkets, a division of Standard & Poor’s that calculates the index.
“The pullback in the U.S. residential real estate market is showing no signs of slowing down,” said Shiller, who was among those who forecast the end of the late 1990s stock market boom.
The broad weakness evident in the nation’s housing market is expected to intensify pressures on the U.S. economy.
Still, the accelerated rate of decline in the Case/Shiller report “was not a surprise, given the recent downward trends in existing home sales, rising inventories and tightening credit conditions through the end of the second quarter and in the month of July,” said Brian Bethune, an economist with research firm Global Insight of Lexington, Mass.
Yet the rapid deceleration, he said, serves as a “sobering reminder that the nation’s housing market was already on the ropes even before” world credit markets were thrown into a tailspin this month because of escalating mortgage delinquencies.
In June, 15 of the 20 U.S. markets tracked by the index fell, including declines of 4.1% in the Los Angeles region, 7.3% in San Diego and 4% in San Francisco. Other areas fared significantly worse, particularly Detroit, where prices plunged 11%. Phoenix suffered a 6.6% drop, and home values in Las Vegas were down 5.1% in June versus a year ago.
By comparison, the Pacific Northwest was strong, with prices rising 7.9% in Seattle and 4.5% in Portland.
Other regions posting gains were Charlotte, N.C., at 6.8% and Dallas and Atlanta at 1.6%.
In Southern California, the residential real estate market is skewed somewhat by stronger demand for higher-priced homes.
That’s partly because people shopping for homes in Beverly Hills and Malibu are largely unaffected by tighter loan standards, and the neighborhoods where they purchase homes aren’t sprinkled with lender foreclosures.
That phenomenon helped push up the region’s overall median price to $505,000 in the second quarter, up 4.4% from the year before, even though sales fell 33%, according to DataQuick Information Systems, which compiles statistics based on all closed real estate transactions in a given period.
In the three months ended June 30, Los Angeles County prices rose 5.8% and Orange County prices were flat. San Diego prices declined 1.7% from a year earlier, DataQuick said. San Bernardino and Riverside counties, the region’s two most affordable areas -- but with the biggest rise in foreclosures -- saw prices slide about 2% year over year.
“We’re getting different pictures as to how dire things are,” said Raphael Bostic, an economist and USC professor. “I think the general picture says that things aren’t great, but that the sky hasn’t fallen in quite yet, certainly not in Southern California.” The majority of Southland homeowners, he said, should be more concerned with economic fundamentals, such as whether there is job growth in the region, than monthly or quarterly swings in real estate trends.
“These short-term fluctuations, while significant, won’t touch people on a day-to-day basis,” Bostic said.
“For the average homeowner, if you’re not looking to sell, try as much as you can to not think about this stuff.”
But it could be hard for people to disregard the onslaught of negative housing-related news. A separate report Tuesday showed U.S. consumer confidence taking its sharpest plunge in nearly two years in August in part because of ongoing housing woes.
And representatives of home builders said that problems in the housing market had become so severe that they urged government intervention, including cuts in short-term interest rates.
The federal government is expected to report Thursday that the U.S. median home price fell for the first time since it began keeping statistics since the 1950s.
