The S&P/Case-Shiller Home Price year-end report released today revealed a mixed bag for the national residential market (see full report below). Although the National Home Price Index showed a 2.5 percent decline in the fourth quarter of 2009 over the same quarter a year earlier, this is a significant improvement in the rate of decline seen year-over-year in the first, second and third quarters of 2009, when the index dropped 19, 14 and 8.7 percent, respectively.
Still, it’s too early to call a recovery, according to Robert Shiller, a leading economist and co-author of the report. The confluence of a murky market outlook and soon-to-end government programs, like the Federal Reserve’s investment in the mortgage market and the first-time homebuyer tax credit, makes it difficult to predict housing’s performance over the next few quarters, Shiller told reporters in a teleconference today.
“These are uncertain times. I don’t like being a forecaster in such uncertain times,” Shiller said. “The question is, what trend are we going to see now? It’s very ambiguous.”
Among the 20 cities in the report, there was little consistency in the residential performance. While cities like Las Vegas and Detroit continued to show market pain with 20.6 and 10.3 percent drops in the home price index year-over-year, respectively, Los Angeles showed no difference year-over-year. New York City, meanwhile, showed a 6.3 percent drop between the fourth quarter-2008 and fourth quarter-2009 and Miami declined 9.9 percent during the same time period.
Although it’s not primed for a price recovery any time soon, David Blitzer, managing director and chairman of the index committee at S&P, said Miami “possibly leads in excitement” in its peaks and troughs.
The overall disparity in home price performance nationwide is unusual, when compared to nationwide residential performance in the past, according to Blitzer.
“The national picture [that] two or three years ago was one of unison is now a bit more mixed,” Blitzer said, noting that “Detroit still stands out” as the hardest hit city on the price index, with substantially lower prices compared to a decade earlier.
Moving forward, Shiller contended that it’s difficult to make a cohesive prediction.
“[The market] is not really predicting a price decline,” Shiller said, “but it’s also not predicting price increases.”