Home Prices End 2011 at Record Lows

by InvestorPlace Staff | February 28, 2012 9:53 am

Home Prices End 2011 at Record Lows

The final S&P Case-Shiller home price index[1] for 2011 is in — and  it doesn’t offer much evidence that the ongoing slide in U.S. home prices has finally ended.

As the S&P press release puts it, “all three headline composites ended 2011 at new index lows. The national composite fell by 3.8% during the fourth quarter of 2011 and was down 4.0% versus the fourth quarter of 2010. Both the 10- and 20-City Composites fell by 1.1% in December over November, and posted annual returns of -3.9% and -4.0% versus December 2010, respectively.”

Dashing the hopes that the worst in home prices has come and gone, the report added: “With these latest data, all three composites are at their lowest levels since the housing crisis began in mid-2006.” Each S&P Case-Shiller index monthly report is actually a three-month average. So this latest report includes October, November and December.

Of the major metropolitan areas in the 20-city index, only Miami and Phoenix were up in December versus November, by 0.2% and 0.8%, respectively. Atlanta’s -12.88% annual drop (from December 2010 to December 2011) was the nation’s worst. And only Detroit, with a 0.5% gain, showed positive year-over-year growth.

“In terms of prices, the housing market ended 2011 on a very disappointing note,” said David M. Blitzer, chairman of the Index Committee at S&P Indices. “With this month’s report we saw all three composites hit new record lows. While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended.”

Just yesterday, several U.S. homebuilders saw their stocks jump on a separate report showing that pending contracts for home sales rose[2] more than expected in January. Hovnanian (NYSE:HOV[3]) finished up 4.6% Monday, NVR (NYSE:NVR[4]) gained 2.1%, D.R. Horton (NYSE:DHI[5]) was up 1.9% and KB Home (NYSE:KBH[6]) was up 1.1%. Of those, only Hovnanian is still on the rise in early Tuesday trading, thanks to a report it released today showing its net contracts for January jumped by 27%.

Endnotes:
  1. S&P Case-Shiller home price index: http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blob
  2. pending contracts for home sales rose: http://investorplace.com/2012/02/pending-home-sales-popped-in-january/
  3. HOV: http://studio-5.financialcontent.com/investplace/quote?Symbol=HOV
  4. NVR: http://studio-5.financialcontent.com/investplace/quote?Symbol=NVR
  5. DHI: http://studio-5.financialcontent.com/investplace/quote?Symbol=DHI
  6. KBH: http://studio-5.financialcontent.com/investplace/quote?Symbol=KBH

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