NEW YORK (Reuters) - Prices of single-family homes plunged a record 18.2 percent in November from a year earlier, indicative of a 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 2.2 percent in November from October, S&P said in a statement on Tuesday. * The depreciation on a month-over-month basis was slightly worse than expectations based on a Reuters survey of economists. * The year-over-year price drop, however, was slightly better than expectations. * S&P said its composite index of 10 metropolitan areas fell 2.2 percent in November from October for a 19.1 percent year-over-year drop, matching the previous month’s record drop.
ZACH PANDL, ECONOMIST, NOMURA SECURITIES INTERNATIONAL, NEW
“It’s a small piece of positive news because the decline was a bit less than expected on a month-over-month basis. Any sign of price deceleration is welcome. This is still a severe pace of decline. We are at the end of the decline in home prices.
“We are in phase one of the housing correction. You have a lot of distressed sales right now even though prices are finding a floor. You haven’t seen relief on house prices yet. There is still a massive amount of inventory in the market.
“We are looking at an almost 30 percent decline in residential investment in the fourth quarter.”
GARY THAYER, SENIOR ECONOMIST, WACHOVIA SECURITIES, ST. LOUIS
“The numbers still show another decline. We’re still looking at fourth-quarter numbers when the credit crisis was in full swing and before the Federal Reserve took steps to push mortgage rates down. We’ll have to watch very closely during the next few months to see if we get a recovery in housing started and possibly a stabilization in prices, but clearly the fourth quarter was a very difficult period for housing.”
DAVID WYSS, CHIEF ECONOMIST, STANDARD & POOR’S, NEW YORK:
“Prices are still going down, but the good news is the pace of decline seems to have stabilized. So it’s limited good news if you will.
“If you look at numbers on a city by city basis, what you find is this total consistency, everybody’s down. But there are signs in some of the cities that started to go down early, that maybe things are stabilizing a little bit. Places like Cleveland.
“Just a little bit better than expected, but pretty marginally. I guess the good news is the pace didn’t accelerate.”
KEITH HEMBRE, CHIEF ECONOMIST, FAF ADVISORS, MINNEAPOLIS:
“The monthly decline continues to accelerate. The 20-city home price index is probably off 25.2 percent from its peak. That’s a big move. Unfortunately, the supply and demand conditions suggest more downside to be realized. I think we could see another 10 percent downside, which would go a long way toward restoring equilibrium.
“I wouldn’t take a lot of comfort in the existing home sales number yesterday because a lot of them were short sales and foreclosed homes.
“Housing will be a shave closer to three-quarters of a percentage point in fourth-quarter GDP.”
MARKET REACTION: STOCKS: U.S. equity index futures hold gains after data. BONDS: U.S. Treasury debt prices extend gains after data. DOLLAR: U.S. dollar extends losses versus euro.
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