Case-Shiller Home Price 20-City Index Falls 4.9% YoY in September as Home Price Declines Accelerate

Home price declines continue to accelerate, rising from a 3.3% drop in the second quarter to a 4.5% decline in the third quarter, which was the largest quarterly decline on record. The index has been tracking home prices since 1988. The monthly YoY decline of 4.95% (consensus -4.8%) for the 20-city index is the largest since the monthly data began being collected in 2001, and follows a 4.3% YoY drop in August. The declines are broad-based with 15 of 20 metro areas showing weakening home prices YoY. When looking at the change from August to September though, all 20 areas saw MoM drops in housing prices (not seasonally adjusted). When looking only at the 10-city composite, which is more focused on bubble areas, house prices have dropped -5.5% YoY.

Annualizing the past three months of data, the 20-city index indicates an annual drop of 7.4% in home prices, while the smaller 10-city index indicates an 8.3% pace of decline. Over the past three months only, the four cities seeing the largest declines in home prices have been Los Angeles(-10.7% annualized), Washington, DC (-8.8% annualized), and New York/San Francisco at -5.7% annualized.

The largest annual decline in home prices happened in Tampa (-11.12%), followed by Miami at -9.96%. Detroit, Las Vegas, and San Diego all have declines of over 9% YoY. Seattle and Charlotte are the two strongest housing markets, both rising around 4.7% YoY.

It is important to remember that even with the recent softening in house prices, over the longer term of three years, only four cities - Boston(-.84%), Detroit(-9.72%), Cleveland(-2%), and San Diego(-3.39%) - have lower house prices. Over these past three years, Phoenix, Seattle, and Portland still have house prices that are over 40% higher than they were three years earlier, on average.

The bottom line is that housing price declines are accelerating and spreading across the country to all regions. Economists are now calling for national house prices to have declined around 7% YoY by the end of 2007.