INSTANT VIEW: U.S. January housing prices fall record 19 percent
NEW YORK (Reuters) - Prices of U.S. single-family homes in January plunged a record 19.0 percent from a year earlier, indicative of a U.S. housing market that is still in the throes of a deep recession, according to the Standard & Poor's/Case-Shiller Home Price Indices.
KEY POINTS: * The composite index of 20 metropolitan areas fell 2.8 percent in January from December, S&P said in a statement on Tuesday. The 20-city index dates back to 2000. * The drops on a month-over-month as well as year-over-year basis were bigger than expectations based on a Reuters survey of economists. * Out of the 20 metro areas, 13 areas showed record rates of annual decline in January, and 14 areas reported declines in excess of 10 percent versus January 2008.
COMMENTS:
OMER ESINER, SENIOR MARKET ANALYST, RUESCH INTERNATIONAL, WASHINGTON:
"The Case-Shiller report is clearly another indicator that the housing market is showing little signs of bottoming. But it did rekindle risk aversion and that's why we have seen the dollar perk up against the euro. It is a dated number at this point but it is the latest number we have and it's still significant. Some of the recent metrics on housing have shown a little bit of improvement, but given the outlook for higher unemployment, it's hard to get enthusiastic about the housing market."
JIM AWAD, MANAGING DIRECTOR, ZEPHYR MANAGEMENT, NEW YORK:
"I think what this says is that the rally in the markets is based on a hope that the economy is bottoming and that the housing market is bottoming. This data is part of the reality check that we're going to get over the coming month. It's premature to say that we're out of the woods, though we'll probably get an up day today because it's the last day of the quarter.
"April will be a real reality check month for the markets."
PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:
"The S&P Case-Shiller index was a little bit worse than expected which means that prices in January fell from December a little bit more than they did last year. We're still doing a little bit worse month by month than a year ago, but the deterioration compared to the performance a year before is very gradually getting more stable.
"The good news is that we see some stabilization
in terms of units being bought, but there evidently is a big latent inventory that appears on the market every time things seem to improve. People are waiting for the market to improve and everytime it seems to be turning more houses get listed and that keeps a very tight lid on prices. Meanwhile, foreclosure sales further depress prices."
KEITH HEMBRE, CHIEF ECONOMIST, FAF ADVISORS, MINNEAPOLIS:
CASE-SHILLER: "It just confirms the downward trend in home prices. We'll see a slower pace of decline in the near month. But given the huge supply overhang, we'll see further downward move."
NAPM-NY: "We have seen the worst in terms of the rate of economic decline. Things are still shrinking but at a slower pace. Demand remains stable in the second quarter because of the income support coming from the stimulus program. The rate of production decline should be mitigated pretty meaningfully into the second half of the year. I still see positive reading for the second half about 1 percent, which should slow the pace of the rise in unemployment."
GEORGE DAVIS, CHIEF FOREIGN EXCHANGE TECHNICAL ANALYST, RBC CAPITAL MARKETS, TORONTO:
"It looks slightly weaker than expected on a year-over-year basis and as a result indicates we are still seeing the retrenchment in the housing sector continue. In terms of the dollar, it might be a very small positive as it may have a slight negative impact on equity markets and push risk aversion levels higher."
MARKET REACTION: STOCKS: U.S. equity index futures pare gains slightly. BONDS: U.S. Treasury prices pare small losses to trade mostly flat. DOLLAR: U.S. dollar holds losses.
