July 29, 2009
Slide in Home Prices Is Slowing Down, Index Shows By DAVID STREITFELD The long slide in housing prices is continuing to brake, figures released Tuesday indicate. For the fourth consecutive month, there was modest improvement in May in housing prices, according to Standard & Poor’s Case-Shiller Home Price Index, a closely watched measure of the market. The index of 20 metropolitan areas had an annual decline of 17.1 percent in May from the same month in 2008, an improvement over April’s 18.1 percent fall. The report contained another, more startling piece of data: prices increased in May by a halfpercentage point from April, the first positive monthly return for the index in three years. “It is very possible that years from now we will say that April 2009 was the trough in home prices,” S.&P.’s vice president for index services, Maureen Maitland, said. But skeptics were quick to note the increase was measured in absolute terms. When adjusted for seasonality, a standard measure, prices showed a slight drop. From its peak three years ago, the index is down about a third, pushing prices in major cities back to where they were in 2003. Analysts said that the improvement over April was unexpected and welcome, but they differed over whether it could be sustained. “Recession is over, economy is recovering — let’s look forward and stop the backward-looking focus,” the Wells Fargo chief economist John E. Silvia wrote in a research note. Ian Shepherdson at High Frequency Economics was more cautious. “We would not expect any gains to last,” Mr. Shepherdson told clients, “because prices are still high relative to incomes and rents, and also because the uptick in sales will, we think, prompt a new wave of supply.” For 16 months, beginning in October 2007 and ending in January 2009, the Case-Shiller index posted record annual declines. As recently as February, all of the 20 cities in the index showed a decline from the previous month. In May, only five of them did. The cities that are still dropping are Las Vegas and Phoenix, the two places where the bubble was the worst, as well as Miami, Seattle and Los Angeles. Prices improved in 13 cities. A housing market where prices are consistently stable — never mind one that rises — nevertheless appears a long way off. Many analysts think the most hopeful possibility is that
prices start to rise modestly on an annual basis late next year. But that date could be pushed back even further if the economy comes out and then dips back into a recession.