The headline number is down by 14% but when you look at the details there is some good news (not much but some) - new home sales are up in April and Charlotte is actually up for the last 12 months - however the bottom is not in for the real estate market
Mike
By Bob Willis
May 27 (Bloomberg) -- Home prices in 20 U.S. metropolitan areas fell in March by the most in at least seven years, pointing to weakness in the housing market that will constrain economic growth.
The S&P/Case-Shiller home-price index dropped 14.4 percent from a year earlier, more than forecast and the most since the figures were first published in 2001. The gauge has fallen every month since January 2007.
Prices continue to slide as record foreclosures put more homes on the market and stricter lending standards make it harder to get loans. Falling home values are slowing consumer spending, threatening to halt the six-year expansion.
``There is excess supply, weakening demand, prices are falling and will continue to fall,'' said Kevin Logan, senior market economist at Dresdner Kleinwort in New York. ``Housing sales are still trending lower.''
Prices dropped 2.2 percent in March from a month earlier, after a 2.6 percent decline in February, the report showed. The figures aren't adjusted for seasonal effects, so economists prefer to focus on year-over-year changes instead of month-to- month variations.
New-Home Sales Rise
A government report showed new-home sales unexpectedly rose in April after readings for the prior month were revised down. Sales increased 3.3 percent to an annual pace of 526,000 from a 509,000 rate the prior month that was the lowest in 17 years, the Commerce Department said today in Washington.
Another report from the Conference Board indicated confidence among U.S. consumers fell this month to the lowest level in more than 15 years.
Treasuries fell, pushing yields higher. The benchmark 10- year note yielded 3.91 percent as of 10:09 a.m. in New York, up 6 basis points. Stocks were higher.
The index was forecast to drop 14 percent following a 12.7 percent drop in February, according to the median estimate of 9 economists surveyed by Bloomberg News. Estimates ranged from declines of 12.9 percent to 15.1 percent.
The group's 10-city composite index, with a history back to 1987, fell 15.3 percent in the 12 months ended in March, also the most ever.
Charlotte Up
Nineteen of the 20 cities in the index showed a year-over- year decrease in prices for March, led by a 26 percent slump in Las Vegas and a 25 percent decline in Miami. Charlotte was the only area showing a gain with a 0.8 percent increase.
Compared with February, homes in 18 of 20 areas covered dropped in value.
Prices remained under pressure in April, a report last week showed. The median price of existing homes sold last month fell 8 percent from April 2007, the National Association of Realtors said. Existing home sales fell 1 percent and were 33 percent below their peak in September 2005. The number of unsold homes rose to its second-highest level on record.
Most economists and investors say housing prices have further to fall after more than doubling in the early part of the decade to a peak in 2006.
``The decline in housing prices is still accelerating and is going to overshoot on the downside the same way it overshot on the upside,'' billionaire investor George Soros told a conference at the London School of Economics last week. ``We are not yet halfway in the decline in housing prices.''
Recovery in Demand
The slide in prices may have contributed to a recovery in demand in some areas. Sales in the San Francisco region jumped 29 percent in April from the previous month, the biggest March- to-April gain in at least 20 years, according to DataQuick Information Systems in San Diego. The median price was $518,000, down 22 percent from the $655,000 peak in June and July 2007, the real estate data company said.
The two-year housing recession has reverberated across the economy, hurting job growth, investments and consumer spending. Falling home prices leave Americans with less equity to tap for spending on appliances, cars or home-improvement projects.
Retailers have been hard hit. Home Depot Inc., the largest home-improvement retailer, last week said first-quarter profit fell 66 percent as consumers cut back on remodeling.
``The housing and home improvement markets remained difficult in the first quarter,'' Chief Executive Officer Frank Blake said in a statement. ``In fact, conditions worsened in many areas of the country.''
Declining home prices also leave Americans with mortgage balances that are more than their houses are worth, pushing up new foreclosures to an all-time high at the end of 2007, according to the Mortgage Bankers Association. Record foreclosures threaten to drag out and deepen the downturn.
The government is seeking to reduce the foreclosures and limit financial losses. Lawmakers at the Senate Banking Committee last week approved legislation to create a program at the Federal Housing Administration to insure as much as $300 billion in mortgages for struggling borrowers after lenders agree to reduce the loan amount.
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