Have housing prices in the United States started to turn down already? We’ve seen some mixed news in the real estate market lately, but given the lag in most home price data it looks to me like the market is already beginning its double dip. I am still expecting as much a 7-15% decline in national prices from current levels. The Cleveland Fed sums up the current situation:
“Home price growth was absent in July, from the standpoints of both the S&P/Case-Shiller and the FHFA home price reports. As expected in an early after-month of the home buyer tax credit, S&P/Case-Shiller home prices ground to a halt in July after a full year of growth in the 10-city index, while prices in the 20-city index dipped a slight 0.1 percent. Year-over-year growth in both indexes cooled off roughly a percentage point over the month. Prices in the 10-city index are now up 4.1 percent since last July, and prices for the 20-city index are up just 3.2 percent.
The FHFA Purchase-Only House Price Index declined for a second straight month, dropping 0.5 percent in July following a 1.2 percent retreat in June. Year-ago price growth slipped accordingly, from −2.5 percent to −3.2 percent. After the FHFA index reached a peak value in April 2007, prices fell rapidly until November 2008. Since then the index has fluctuated considerably, overall trending slightly downward. In the big picture, the index has been set back to its level in September/October 2004, when home prices were still rising rapidly.”