Steel Markets

Case-Shiller Reports Slowing Home Prices

Written by Sandy Williams

The S&P CoreLogic Case-Shiller Indices showed annual home price gains dipped below 6.0 percent for the first time this year posting at 5.8 percent, indicating price gains may be weakening. After seasonal adjustment, the National Index rose just 0.6 percent month-over-month.

The 20-city Composite eased downward 0.4 percent from July to register a 5.5 percent gain in August. The seasonally adjusted indexes for both the 20-City Composite and 10-City Composite rose 0.1 percent month-over-month.

“Following reports that home sales are flat to down, price gains are beginning to moderate,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Comparing prices to their levels a year earlier, 14 of the 20 cities, the National Index plus the 10-city and 20-city Composite Indices, all show slower price growth. The seasonally adjusted monthly data show that 10 cities experienced declining prices. Other housing data tell a similar story: prices and sales of new single-family homes are weakening, housing starts are mixed and residential fixed investment is down in the last three quarters. Rising prices may be pricing some potential home buyers out of the market, especially when combined with mortgage rates approaching 5 percent for 30-year fixed rate loans. 

“There are no signs that the current weakness will become a repeat of the crisis, however. In 2006, when home prices peaked and then tumbled, mortgage default rates bottomed out and started a three-year surge. Today, the mortgage default rates reported by the S&P/Experian Consumer Credit Default Indices are stable. Without a collapse in housing finance like the one seen 12 years ago, a crash in home prices is unlikely.” 

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