Instant view: Home prices slip in August

NEW YORK (BestGrowthStock) – Prices of U.S. single-family homes fell in August, hovering around recent lows after the expiration of popular homebuyer tax credits, according a Standard & Poor’s/Case-Shiller home price report on Tuesday.

KEY POINTS: * The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.3 percent in August from July on a seasonally adjusted basis, as expected in a Reuters poll. The dip followed a 0.6 percent July gain. * S&P, which publishes the indexes, also said home prices in the 20 cities index rose 1.7 percent from August 2009, a slower annual pace than the 3.2 percent increase in July.

COMMENTS:

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK:

“The report on the seasonally adjusted basis was down 0.3 percent so it’s a disappointing report. The story for the past year has been surprisingly steady production with housing starts steady at low rates. But the problem is the potential shadow inventory of foreclosures. If you believe that you can’t have a vibrant economy without a vibrant housing market, then you have to deal with the foreclosure problem. If the banks won’t voluntarily refinance the loans and if you can’t cram it down the banks’ throats, then the taxpayers have to do something.”

WARD MCCARTHY, CHIEF FINANCIAL ECONOMIST, JEFFERIES & CO., NEW

YORK:

“Since the expiration of the tax credit we have seen the housing market downshift and it looks like the price adjustment is still ongoing but it has been relatively moderate. In the composite 20, you only had five areas with price increases, so there has been a deterioration in the last couple of months. That’s the reality, but it does not seem not seem to be a freefall and that’s what really matters.

“It’s not a major market-mover unless there’s a big surprise and this is not a big surprise.”

MARK LUSCHINI, CHIEF INVESTMENT STRATEGIST, JANNEY MONTGOMERY

SCOTT, PHILADELPHIA:

“It isn’t a great shock in that while it showed an increase, it was a little less than it had been in the prior month. We’re starting to see more evidence of what’s happening in the housing market without the artificial benefit of the tax credit. What it suggests, encouragingly, is that in the absence

of that credit, there’s still some traffic in the market, as seen yesterday with home sales. While prices are down, its reaching the level that’s drawing interest. This sort of validates the idea that prices are starting to form a trough. We’ll see if this continues to trend.”

MARKET REACTION: STOCKS: U.S. stock index futures barely budged. BONDS: U.S. Treasury debt prices were little changed. DOLLAR: U.S. dollar edged higher against the euro.

Instant view: Home prices slip in August