Home prices a smidge off lowest since ’03

The S&P/CS home price index in Aug fell .05% m/o/m seasonally adjusted and 3.8% y/o/y, both more than expected and the index level fell to the lowest since March and is just a smidge above the lowest since 2003. On a y/o/y basis, home prices rose in Detroit and Washington, DC (not what the founding fathers hoped for) and fell the most in Minneapolis, Phoenix and Portland. Bottom line, home prices are about to break below its previous low point in this cycle and its not until home prices bottom that the balance sheets of US banks can be confidently relied upon. Also, while DC has a newly revised HARP program, it will only help those who are already paying their mortgage. House prices will bottom when they reach a level that is attractive to buyers. Rocket science I know not but somehow a mystery to many.

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