U.S. home prices continued to fall through the first quarter of 2012, but the rate of decline has slowed, according to the S&P Case-Shiller Home Price Index released today. A measure of home prices across 20 major metropolitan areas fell 2.6 percent in the year ending March 2012, while the 10-city composite fell 2.8 percent year over year, bringing home prices to the lowest levels since mid-2006.
“While there has been improvement in some regions, housing prices have not turned,” David M. Blitzer, chairman of the index committee and S&P Indices said in a statement. “This month’s report saw all three composites and five cities hit new lows.”
The continued, albeit slower decline in home prices helps explain why relatively few Millionaire investors describe buying a home as their smartest financial move. Only 13 percent identified buying a home as “the best financial decision” they had ever made, in a Milllionaire Corner survey conducted in March, compared to 38 percent who rank investing in retirement as their most strategic financial decision. One-fourth of millionaires – investors with a net worth of $1 million or more, not including primary residence – believe their choice to lead a frugal lifestyle in order to be able to save money was their most successful financial strategy.
Today’s home price index offered some good news mixed in with the bad and, according to Blitzer, provided some hope for a housing market recovery. The number of cities to see new lows in average home prices fell from nine in February to five in March, and includes the cities of Atlanta, Chicago, Las Vegas, New York and Portland. Atlanta saw the biggest one-year drop of 17.7 percent, while Las Vegas fell 7.5 percent year over year and Chicago saw a 7.1 percent annual decline in home prices. And, seven cities – Charlotte, Dallas, Denver, Detroit, Miami, Minneapolis and Phoenix – saw home prices rise over the past year. According to the home price index, prices were up 6.1 percent in Phoenix, 3.3 percent in Minneapolis and 2.6 percent in Denver.
More recent data released last week by the National Association of Realtors showed a 10.1 percent increase in prices for existing homes in April. Lawrence Yun, chief economist for the association, predicts prices will rise 1 percent to 2 percent over 2012, and begin to recover more robustly in 2013.
“This is what we need for a sustained recovery,” said Blitzer, “monthly increases coupled with improving annual rates of change. Once we see this on a broader level we will be able to say the market has turned around.”
The month of March produced mixed results with 12 cities experiencing a rise in average home prices. One – Las Vegas - remained flat, while seven cities saw prices fall. According to Blitzer, of the S&P Case-Shiller Home Price Index, “After close to six consecutive months of price declines across most cities, this is relatively good news.”