Instant View: Home prices fell in February

NEW YORK (BestGrowthStock) – Prices of U.S. single-family homes fell in February on a monthly basis but posted the first annual increase in more than three years, Standard & Poor’s/Case Shiller home price indexes showed on Tuesday.

KEY POINTS: * The report suggests more price erosion is possible before prices start rising on a sustained basis, S&P said. * The price improvement can be attributed to momentum from the federal homebuyer tax credits, which expire on April 30, and prices could be pressured further by foreclosure sales. * The S&P composite index of 20 metropolitan areas declined 0.1 percent in February on a seasonally adjusted basis, matching the forecast in a Reuters survey, after rising for eight straight months.

COMMENTS:

BRIAN DOLAN, CHIEF CURRENCY STRATEGIST, FOREX.COM, BEDMINSTER, NEW JERSEY:

“It’s a minor improvement in housing, which has been the pattern over the last couple of months. So I don’t think that’s really what’s driving us today. I think we’re still looking at the unwinding of the risk trade. The euro-yen dropped below a key technical level at 124.50 just before the data and now it seems stock futures are taking another dip on the Case-Shiller data, so that’s also negative for risk.

“Markets are really concerned about sovereign debt issues in Europe. Greek CDS spreads are hitting Argentine levels today. In that atmosphere, the Fed meeting is a bit of a sub-current, though markets are expecting some indication of improvement and possibly some change in the accommodative language. So ahead of that, people are also wary of taking on risk.”

TIM GHRISKEY CHIEF INVESTMENT OFFICER, SOLARIS ASSET MANAGEMENT IN BEDFORD HILLS, NEW YORK:

“Certainly the top line number here, year-over-year increase in pricing is disappointing, below expectations. It shows we are still in the early stages of any rebound in housing prices. We are really still in what we consider a stabilization period. The main reason is the shadow inventory of houses that are not technically for sale, but would be for sale if housing prices lifted is still out there.

“Having said all that, these are results for the month of February and that is a very slow time for housing sales. Much more critical are the spring selling months, so we would be looking much more closely at the March, April, May and June data. That tends to be more indicative of a longer-term trend. So a bit disappointing but given the seasonality and the fact that on a year-over-year basis it is positive, probably not a market moving event.”

MICHAEL SHELDON, CHIEF MARKET STRATEGIST, RDM FINANCIAL, WESTPORT, CONNECTICUT:

“This is the first year-over-year gain since 2006, which is positive, but if you take the less optimistic side of thing, the increase was a little below estimates. If you consider both sides of the coin, the fact that there’s stabilization is the more important factor, but I don’t expect this will have much of an impact on trading today because of everything going on overseas.”

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK:

“The number suggests that perhaps the market is softer than one would like, given some relatively upbeat news on home sales last week. For the first time since 2006 you ended up with a year-over-year change of +0.6 percent, but the actual month-to-month prices declined more than expected, the largest decline since March of last year when prices fell over 2 percent. The month-to-month headline number is not seasonally adjusted, but even the seasonally adjusted index dropped 0.1 percent.”

TORSTEN SLOK, SENIOR ECONOMIST, DEUTSCHE BANK SECURITIES, NEW YORK:

“It’s positive — the good news is that the stabilization seems to be picking up.

“The big picture really is year over year. There are a lot of fluctuations month over month.

“The primary risk for the outlook is that home prices start to take a significant leg down again, and given that that’s not what we’re seeing, this is good news.”

MARKET REACTION: STOCKS: U.S. stock index futures hold losses BONDS: U.S. Treasury debt prices steady at higher DOLLAR: U.S. dollar holds gains versus euro

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Instant View: Home prices fell in February