Case-Shiller report: Home prices take 14% hit

Home prices nationally fell in the first quarter, confounding predictions that the residential real estate downturn was nearing bottom.

New-home sales also continued their year-over-year decline in April while showing a slight improvement from the revised March numbers.

Prices tracked by Standard & Poor's Case-Shiller National Index showed a 14.1 percent decline from the 2007 first quarter.

The quarterly composite index tracks prices in more than 100 metropolitan areas in nine census tracts, including Philadelphia.

"The steep downturn in residential real estate continues," David M. Blitzer, chairman of the index committee at Standard & Poor's, said today. "There are very few silver linings that one can see in the data."

Case-Shiller painted a gloomier picture of home prices than last week's Office of Federal Housing Enterprise Oversight's purchase-only quarterly index, which showed only a 3.1 percent drop in those census tracts.

Case-Shiller's monthly 20-city index, which does not include Philadelphia but does cover some of the hardest-hit metropolitan areas in the country, including areas with the highest foreclosure rates, fell 14.4 percent in March from March 2007.

Nineteen of the 20 reported declines. Six - Las Vegas, Los Angeles, Miami, Phoenix, San Diego and San Francisco - are now at negative rates exceeding 20 percent.

Case-Shiller indexes have flaws, said Patrick Newport, housing economist at Global Insight Inc., of Lexington, Mass.

The national index excludes 13 states and partially covers 29 others. The city indexes are disproportionately represented with cities that experienced housing bubbles.

Still, Newport said, it was possible that the indexes were dropping more than the numbers indicate because the calculations do not include non-price incentives - for example, the seller paying for renovations or helping with financing - that effectively lower the sale price.

Sales of new single-family houses in April fell 42 percent nationally from April 2007, the Census Bureau said today - the biggest drop since September 1981.

"Our latest builder surveys actually show that home buying has not yet stabilized, and we are anticipating some further erosion over the coming months," said David Seiders, National Association of Home Builders chief economist.

The Northeast had the highest year-over-year drop at 58 percent.

Sales in the region rose 41.7 percent in April from March, however.

Month-to-month, sales nationally rose 3.3 percent.

April's median new-home sales price was $246,100, up 1.5 percent from $242,500 in April 2007. In March, new-home prices were 14.7 percent lower than March 2007.

Newport said that because the monthly prices jumped around so much, a better measure of change was the Census Bureau's constant-quality price index, which showed first-quarter prices 7.65 percent lower than a year earlier.

The seasonally adjusted estimate of new houses for sale at the end of April was 456,000. This represents a supply of 10.6 months at the current sales rate.

The peak was 575,000 two years ago.

"This is the silver lining in the new-home sales data," said Moody's Economy.com chief economist Mark Zandi. "Even though sales are abysmally low, inventories of unsold homes are falling. There is a long way to go as a normal level of inventory is 300,000, but the market is moving in the right direction."

Completed homes accounted for 40 percent of the total for sale, up from 33 percent a year earlier, and the median number of months for sale since completion rose to eight – the highest since mid-1991.