U.S. housing market is not poised for another downturn, despite its slowing in October.
The S&P Case-Shiller 20-city home-price index put year-over-year housing price declines at 7.3% year-over-year and only seven cities posted month-to-month gains compared with 19 in September. This comes after a solid summer for housing, where some of the most depressed housing areas were posting solid month-to-month gains.
"The turnaround in home prices seen in the spring and summer has faded," wrote David Blitzer, chairman of S&P's index committee. "All in all, this report should be described as flat."
However, housing experts caution that winters generally send a chill through the housing market, a trend further borne out by the Case-Shiller statistics. On the more widely followed non-adjusted basis housing prices were flat in both the 10-city and 20-city Case-Shiller indexes. But on a seasonally adjusted basis, which takes into account the slight premium home buyers are willing to pay to get into a house before the beginning of the academic year, home prices nudged up 0.4%.
"We believe the deceleration in house price inflation in September and October reflects a normal seasonal downswing and not a sign that market conditions are deteriorating," wrote Zach Pandl, economist at Nomura Global Economics, The Wall Street Journal reports.
Meanwhile, economist Joel Naroff of Naroff Economic Advisors said he doesn't think the October reading foretells a new trend. He predicted that by next spring housing prices could show a year-over-year increase.
"They are not likely to be strong, but up is a lot better than down," he said in a report.
In October, meanwhile, prices rose in just seven of the 20 cities. San Francisco and Phoenix saw the biggest improvement, while Las Vegas remains the weakest of the major markets. Home prices in Las Vegas were down 26.6% from October 2008, MarketWatch reports.
It was also reported, Hovnanian Enterprises Inc.(HOV), New Jersey's largest homebuilder, said Dec. 16 its fourth-quarter loss narrowed as more buyers signed purchase contracts. "On the whole, we are seeing more price stability across our markets," Chief Financial Officer Larry Sorsby said in a Dec. 17 conference call.
Case and Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, created the home-price index based on research from the 1980s. Case this month announced his retirement from teaching, BusinessWeek reports.