Home prices in 20 U.S. cities rose in September at the slowest pace in eight months, showing the latest slump in sales is destabilizing housing.
The S&P/Case-Shiller index of property values climbed 0.6% from September 2009, the smallest gain since January, the last time prices declined year over year, the group said today in New York. The increase was smaller than the 1% median forecast in a Bloomberg News survey of economists.
The end of a government tax credit and unemployment near 10% have led to a decrease in demand, delaying a recovery in the industry that precipitated the worst recession since the 1930s. Mounting foreclosures and declining home values threaten to undermine the improvement in consumer confidence that is helping boost spending and accelerate economic growth.
The median forecast was based on projections of 28 economists surveyed. Estimates ranged from an increase of 1.6% to a decline of 3.4%. Year-over-year records began in 2001. Prices climbed 1.7% in the year ended August.
The gauge fell 0.8% in September from the prior month after adjusting for seasonal variations, the biggest drop since April 2009, following an August decrease of 0.5%. Unadjusted prices fell 0.7% from the prior month.
The year-over-year gauge provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.
Nationally, prices decreased 1.5% in the third quarter from the same time last year and were down 2% from the previous three months.
Fifteen of the 20 cities in the S&P/Case-Shiller index showed a year-over-year decline, led by a 5.6% drop in Chicago. San Francisco showed the biggest year-over-year increase, with prices rising 5.5%.
Compared with the prior month, 18 of the 20 areas covered showed a decrease on an unadjusted basis, led by Cleveland. The only two showing month-over-month increases were Washington and Las Vegas.
Housing demand has slumped after a tax credit worth as much as $8,000 expired in June. Sales of existing homes, which now make up more than 90% of the market, fell more than forecast in October as foreclosure moratoriums and a lack of credit disrupted real estate, figures from the National Association of Realtors showed last week. In July, sales ran at the weakest pace in a decade’s worth of record-keeping by the group.
The Case-Shiller gauge is based on a three-month average, which means the September data are still being influenced by the plunge in transactions in August and July.
The Federal Reserve announced this month it will buy another $600 billion U.S. in Treasury securities through June in a bid to keep borrowing costs low and spur growth. The weakness in housing figured in their deliberations.
