No surprise here: The Case-Shiller Home Price Index fell yet again.
Through August 2007, prices of existing single family homes across the United States. The index of 10 U.S. cities fell 5% in August from a year ago — the biggest drop since June 1991 (a decline of 6.3%
in April 1991 holds the record). It is the 21st consecutive month of decelerating returns.
Here’s Shiller on the details:
“At both the national and metro area levels, the fall in home prices is showing no real signs of a slowdown or turnaround,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “Year-over-year and monthly price returns are continuing to either move deeper into negative territory or are experiencing persistent diminishing returns. There is really no positive news in today’s report, as most of the metro areas are showing declining or vanishing returns on both an annual and monthly basis. Only two metro areas – Denver and Detroit – showed improvement in their annual returns and even those were reports of slightly less negative numbers.”
Doesn’t look quite like a bottom just yet.
Treasury Secretary Hank “Strong Dollar” Paulson has finally come around. After making several prior, premature calls for a Housing bottom, I give credit to Paulson, who has now clearly changed his tune:
“The figures reinforce the view among Federal Reserve
officials and Treasury Secretary Henry Paulson that the housing
slump has further to go. Near-record inventory levels suggest
sellers will continue to lower prices, posing a threat to
consumer spending because homeowners will have less equity to
“This is really the No. 1 risk: a sustained, sharp
decrease in home prices really squeezing consumers,” said
Meny Grauman, an economist at Scotia Capital Inc. in Toronto.”
As Keynes stated, “When the facts change, I change my mind. What do you do, sir?”
Indeed . . .
Further Weakening in Home Prices
S&P/Case-Shiller Home Price Indices
October 30, 2007
S&P/Case-Shiller Home Prices Fell 4.4% in August
Bloomberg, Oct. 30