Instant View: Home prices down in July: Case-Shiller

NEW YORK (BestGrowthStock) – Single-family home prices dipped in July, and are seen stabilizing near the lows without the homebuyer tax credit that ended in April, Standard & Poor’s/Case-Shiller home price indexes showed on Tuesday.

KEY POINTS: * The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.1 percent in July from June on a seasonally adjusted basis, as expected in a Reuters poll. The dip followed a 0.2 percent June rise, which was revised down from a 0.3 percent increase. * Unadjusted, the 20-city index gained 0.6 percent after June’s 1 percent gain. A 0.4 percent rise was expected. S&P, which publishes the indexes, also said home prices in the 20 cities index rose 3.2 percent from July 2009, a slower annual pace than the 4.2 percent increased in June. * Ten of the cities had annual gains and only Las Vegas set a new low, as the impact of the homebuyer tax credit faded away, S&P said. But the year-over-year growth rates slowed in 16 of the cities and both the 10- and 20-city composite indexes in July from the prior month.

COMMENTS:

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:

“The market is confronting a slow pace of sales at the same time that it has a very big inventory. It will almost certainly get worse. The imbalance is too severe.

“On a running basis, it’s weakening, as was expected. That reflects the expiration of the tax credit which artificially stimulated demand.

“The Fed probably looks at this market as pretty much played out as a potential stimulus to the economy.”

IAN LYNGEN, SENIOR GOVERNMENT BOND STRATEGIST, CRT CAPITAL GROUP, STAMFORD, CONNECTICUT:

“Case-Shiller declined in line with expectations. Overall, a soft read on housing but not a surprise to the Treasury market.”

PETER JANKOVSKIS, CO-CHIEF INVESTMENT OFFICER, OAKBROOK INVESTMENTS LLC, LISLE, ILLINOIS:

“I don’t really see a whole lot there — pretty much in line with published expectations. The market does not seem to have reacted either way to it, the futures are pretty much unchanged from where they were before the report. People are still waiting to get a set of numbers that has absolutely none of the government incentive in it for home buyers. From what I was able to gather, we are a couple of months away from that, to finally get 12 months that are totally out of that. That’s probably why there is not much reaction right now.”

JOHN DOYLE, SENIOR CURRENCY STRATEGIST, TEMPUS CONSULTING, WASHINGTON:

“It’s a bit disappointing but that’s not too surprising. We saw housing numbers last week come out a bit better than expected, but they were following a very weak month. So overall, the direction in home prices hasn’t changed much and the market is still very weak. Until we see a positive trend for housing, I would expect people’s outlook to change. This report alone shouldn’t have much impact on currencies today. But if we continue to get poor economic data, the case for the Fed to engage in more quantitative easing will strengthen.”

GARY THAYER, CHIEF MACROSTRATEGIST, WELLS FARGO ADVISORS, ST. LOUIS, MISSOURI:

“It shows some signs of stabilization, but not a real recovery. It would be more promising if home prices were firming up, but we’re not to that point yet. We still have a large oversupply of homes for sale and that’s likely to keep prices soft well into next year.”

GARY SHILLING, PRESIDENT, A. GARY SHILLING & CO, SPRINGFIELD, NEW JERSEY:

“The (non-seasonally adjusted) headline number did show an increase, but I think it’ll keep bouncing around. Frankly I’m a little surprised it showed an increase since we’re after the tax credits and housing sales have been weak since then.

“A month doesn’t tell you much one way or the other, and when you consider the depressed level of prices, a couple of percentage points doesn’t make much difference. Still down about 30 percent from the peak.”

MARKET REACTION: STOCKS: U.S. stock index futures rose BONDS: U.S. Treasury debt prices rallied modestly DOLLAR: U.S. dollar fell against the euro

Instant View: Home prices down in July: Case-Shiller