Home prices in metro areas across the country hit new post-bust lows in November, according to the S&P/Case-Shiller Home Price Indices, released today. Both the 10- and 20-city composite indices fell 1.3% for the month. Once seasonally adjusted, however, the decline of both indexes improves to 0.7%. Year-over-year, the 10-city index was down 3.6% and the 20-city declined 3.7%.
Both composite indexes and nine of the metro areas tracked fell to crisis lows in November, according to the seasonally adjusted data, and 17 of the 20 cities saw prices decline for the month. The exceptions were Denver (up 0.4%), Minneapolis (up 0.1%), and Phoenix (up 0.6%). Chicago fared the worst for the month, with a 2.1% decline. Atlanta was down 1.2% for the month but declined a staggering 15% in the four months ended in November. Atlanta also posted the worst annual decline with a drop of 11.8%.
Patrick Newport, U.S. economist at IHS Global Insight, attributes the two cities’ woes to plagues of distressed properties. "Atlanta has the largest number of REO properties for sale by the Enterprises (Fannie Mae and Freddie Mac), according to a Fed white paper sent to Congress earlier this month, followed by Chicago and Detroit," he wrote in a release discussing the numbers today. "The Chicago and Detroit indexes have both dropped about 5% in just two months."
Despite Detroit’s tumble, the city still managed to rank as one of only two metro areas to post an annual gain in November, with an improvement of 3.8%. Washington, D.C., accounted for the other positive performance with an annual gain of 0.5%. Both cities saw their annual rates fall from their October reports.
Thirteen of the 20 MSAs tracked reported worsened annual rates compared to October. Both New York and Tampa, Fla., were flat year-over-year, while five cities—Charlotte, N.C., Cleveland, Denver, Minneapolis, and Phoenix—reported improved annual rates from the previous month.
The report contradicted last week’s Federal Housing Finance Agency (FHFA) report, which showed home price improvements in eight of the nine Census divisions and a 1.0% price increase nationally. Distressed sales are likely the cause for divergence, Newport wrote, given that "the FHFA indices only track transactions that are under Enterprises jurisdiction, while Case-Shiller tracks all transactions. According to FHFA, about 10% of borrowers with Enterprise loans are underwater, compared with about 35% for loans backed with ‘private label securities.’"
Looking forward, Newport is not optimistic, citing data from the Mortgage Bankers Association that show 12.6% of homeowners with mortgages were either delinquent on payments in foreclosure at the end of 2011’s third quarter; and CoreLogic data that show about 22% of residential properties with mortgages were upside-down by quarter’s end. Given those figures and the rates of unemployment and underemployment, Newport predicts prices will fall another 5% to 10% this year.
David Blitzer, chairman of the Index Committee at S&P Indices, was no more hopeful in his statement regarding the release. "The trend is down," he wrote, "and there are few, if any, signs in the numbers that a turning point is close at hand."
Claire Easley is a senior editor at Builder.