US home prices fall in August, suggesting new market lows

26 October 2010 18:01  [Source: ICIS news]

WASHINGTON (ICIS)--Selling prices for US single-family homes declined in August from July, a major market analysis group said on Tuesday, saying the report was disappointing and indicates that the crucial housing sector has settled into new lows.

Standard & Poors (S&P) said that its survey of home prices across 20 major US cities - referred to by economists as metropolitan statistical areas (MSA) - “shows a deceleration in the annual growth rates for US home prices in 17 of the 20 MSAs”.

S&P said that its highly-regarded Case-Shiller Home Price Indices also found that composite pricing figures for single-family homes for all 20 major metropolitan areas also were lower in August than those recorded for July.

The health of the US housing sector is important to domestic manufacturers of chemicals, resins and derivative products because residential construction work is a major downstream consuming sector for a broad range of chemicals, either in building materials or in the manufacturing processes for end-use components.

“A disappointing report,” said David Blitzer, S&P’s indexes committee.

“Home prices broadly declined in August,” he said. “Seventeen of the 20 cities and composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows.”

“The month-over-month growth rates tell the same story,” Blitzer said. “Fifteen of the 20 MSAs and the composites saw a decline in the month of August as compared to July levels.”

“Indeed, the housing market appears to have stabilised at new lows,” Blitzer added.

“At this time, it does not seem that any of the markets are hanging on to the temporary momentum caused by the home buyers tax credits,” he said, referring to the $8,000 (€5,680) federal tax credit for home buyers that expired in April this year.

After seeing a brief burst of better numbers in the first half this year due to the tax credit, the US housing sector again tumbled into negative territory in a range of market measures such as new home sales, existing home sales and housing starts.

However, the S&P home prices index, which covers data gathered through the end of August, was in contrast with more recent market measures for September suggesting that the housing sector may be in the early stages of a slow recovery.

The US Department of Commerce (DOC) reported last week that US housing starts - new home construction - had shown a strong 4.4% gain for September in the core category of single-family residential building, the second straight month of improvement.

In addition, on Monday this week, the National Association of Realtors (NAR) reported that US sales of existing homes shot up by 10% in September, an unexpected gain that even eclipsed the 7.6% advance in August.

($1 = €0.71)

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