TEXT-S&P: Home prices on rise, but as pendg sls wane

(The following statement was released by the rating agency)

Jan 29 - Standard & Poor's Ratings Services yesterday published a report
highlighting the slight increase in U.S. home prices in November across the 10-
and 20-City S&P Case-Shiller Composite Indices and the FHFA Purchase-Only Home
Price Index. While home prices have been trending up since spring 2009,
existing, new, and pending home sales are waning, which suggests that lower
prices are on the horizon.
Existing home sales declined a monthly record of 16.7% in December after
spiking 7.4% in November, and new home sales dropped 7.6% on a seasonally
adjusted basis in December after declining 9.3% in November. The latest pending
home sales statistics also show that pending home sales declined 16% in
November 2009.
"The decline in home sales is having an impact on current housing inventories,"
said credit analyst Erkan Erturk. "The observed amount of existing homes on the
market grew to a 7.2 months' supply in December 2009 from a 6.5 months' supply
in November, and fewer new home sales in December left an 8.1 months' supply on
the market, up from a 7.6 months' supply in November."
Even if home sales and prices do flatten or drop, the sixth consecutive month
of improvement in the seasonally adjusted S&P Case-Shiller Home Price Indices
further suggests continued stabilization and strengthens our expectation for a
U.S. housing market rebound. Stabilization may be challenged in the months
ahead, however, as an expanding default and foreclosure pipeline of 2005-2007
vintage mortgage loans may push the "shadow" inventory of distressed U.S.
housing even higher.
Key highlights of the November 2009 home price data include these findings:
-- After U.S. home prices showed their first seasonally adjusted increase in
nearly three years in June 2009, they continued to increase through November.
In November, the month-over-month seasonally adjusted home price increases were
0.2% for both the 10- and 20-City Case-Shiller Composite indices. The monthly
increases were a decline of 0.2% when not seasonally adjusted.
-- The November improvement was modest, although the Phoenix, Los Angeles, San
Diego, and San Francisco metro areas experienced seasonally adjusted monthly
price increases of 1% or more. Overall, home prices rose in 14 metropolitan
areas and declined in six on a seasonally adjusted basis.
-- On a year-over-year basis, the 10- and 20-City indices declined 4.5% and
5.3% in November, respectively. This is a significant improvement from declines
of 17% or more in early 2009 reports. The volatility of the 10- and 20-City
indices, as measured by the standard deviation of rolling 12-month price
changes, increased to 5.4% and 4.9% in November from 4.6% and 4.1% in October
and from 3.0% and 2.9% a year ago, respectively.
-- The home price tiers suggest that low-price homes experienced higher
percentage of price declines since mid-2006 than middle and higher-priced
homes.
-- The values of the 10- and 20-City composite indices are currently near their
fall 2003 levels. These indices peaked around mid-2006, but have since lost 30%
and 29% of their values, respectively. This roughly translates to an aggregate
decline of about $664 billion in the original appraisal value of homes across
all regions. Among the metro areas, Phoenix and Las Vegas have experienced
cumulative declines of more than 50% since their peak.
The full article, "Home Prices Advance Again In November, But Slowing Sales
Suggest Price Weaknesses Ahead," published Jan. 28, 2010, on RatingsDirect.
The report is available to RatingsDirect on the Global Credit Portal
subscribers at www.globalcreditportal.com and RatingsDirect subscribers at
www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may
purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail
to research_request@standardandpoors.com. Ratings information can also be found
on Standard & Poor's public Web site by using the Ratings search box located in
the left column at www.standardandpoors.com. Members of the media may request a
copy of this report by contacting the media representative provided.
Primary Credit Analyst: Erkan Erturk, Ph.D., New York (1) 212-438-2450;
erkan_erturk@standardandpoors.com
(New York Ratings Team)