While fundamental releases have been overshadowed this week by continued concerns over Euro-zone contagion, we did get some insight into the US housing sector, mood of consumers, and manufacturing.

In today's session, we had two releases on housing prices, the S&P/Case-Shiller 20-city and 10-city indexes as well as the government's Federal Housing Finance Agency house price index. Both releases focused on the March period which meant we had readings for the full 1st quarter, in addition to monthly and annual changes.

In the S&P release, the 20-city house price index (seasonally adjusted) was down 3.2% in the first quarter compared to the fourth quarter of '09, up 2.3% compared to March of last year, and was down 0.5% from March to February. The year-over-year figure was expected to show a larger 2.5% rise, which means that house prices may be cooling following a rise that was partly supported by the government's $8,000 home-buyer tax credit. It was the second month in a row that the annual rate was positive. The end of the tax credit may bring about another round of house price declines, a negative for the housing market, but that may come in a few months as the increased sales in May and June can help to prop up prices in the near future.


As we can see from this chart home prices are back to their levels from spring 2003, but the index (solid line) has turned down again following a short rise in '09. The dotted line here is the annual change, and while the market has recovered from its steep declines that hit a record -18.9% in the 1st quarter of 2009, the move back above zero starts from a low level. If housing prices slump yet again, it will perpetuate many of the problems in the sector already, including more underwater mortgages and foreclosures, and less homeowners willing to put their homes on the market and take a loss.

A second release on housing prices is the FHFA house price index which collaborated what we saw in the S&P release. While the S&P release focuses on the major 20 metropolitan areas the FHFA index is a national look at prices from information gleamed from Fannie Mae and Freddie Mac-acquried mortgages. Here we see that housing prices were down 1.9% in the 1st quarter, up 0.3% on the month, and down 3.1% in annual terms.


While housing prices moved up on the month, climbing into positive territory for the first time since November, it will be hard to sustain those price gains following the expiration of the government's tax credit.


Here is a look at the housing prices measures in 4 quarter intervals. For example, the last bar is the change in prices over the previous 4 quarters from 1st quarter of 2010 and the 1st quarter of 2009. What we see is the past three years have been very tough on housing prices. This puts into more context the chart we saw from the S&P reading which shows us that the pace of price declines (which are now in their 3rd year) is slowing but we have not yet turned the corner in terms of prices.

The FHFA has another chart that is worth reproducing, which breaks down the price declines by state.


If you can make out the figures on the chart we see that the Southwest of the country, especially states like Arizona and Nevada are seeing some of the steepest price declines over the past year, with the Northwest (Oregon, Washington, and Idaho) also depressed.