Is a ray of light emerging in the U.S. housing market? Perhaps. Home prices in 20 cities declined, but they dropped at a slower 12-month pace in February than in January, according to the S&P/Case-Shiller U.S. National Home Price survey. (pdf)Home prices fell 2.2 percent in February and are down 18.6 percent in the past 12 months; that compares with 2.8 percent and 19.0 percent, respectively, in January. It is the first time in 16 months the decline in prices did not set an annual record -- a statistic that suggests the housing market is attempting to form a bottom. The index has fallen every month since January 2007.
Bottom forming in housing?
Study co-author Karl Case told Bloomberg Radio Tuesday, one could make an argument that housing is struggling toward a bottom.
"We've given up a lot of equity, about $5 trillion," Case told Bloomberg Radio. "There is a little bit of a pickup in Southern California. . . . There are signs that there's increased activity. And there's an argument that it doesn't take a tremendous number of people to move the market up. There are some glimmers in these numbers."
Economists surveyed by Bloomberg News had expected home prices in the 20-city Case-Shiller survey to decline 18.7% in February on a year-over-year basis.
The areas with the largest annual percentage declines were: Phoenix, -35.2%, Las Vegas, -31.7%, San Francisco, -31.0%, Miami, -29.5%, Los Angeles, -24.1%, and San Diego, -22.9 percent.
Year-over-year percentage price changes in other major U.S. cities were as follows: New York, -10.2%, Chicago, -17.6%, Boston, -7.2%, Washington, D.C., -19.2%, Atlanta, -15.3%, Dallas, -4.5%, Denver, -5.7%, and Seattle, -15.4%.
Housing Analysis: There you have it -- it isn't much of a bright side, but we'll take it. The decline in home prices eased in February on a 12-month basis. Still, investors and potential home buyers need to keep in mind that it's just one month of data: home prices could resume a steeper downward plunge if U.S. economic conditions deteriorate. It has happened before. Stay tuned.
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