The American market for single-family homes fell to new lows in February, but prices declined at a slower rate compared to the previous month, a private report showed Tuesday, as the housing market continues to struggle.
Single-family house prices in a group of 20 metropolitan areas tracked by the Standard & Poor's Case-Shiller composite index fell by 3.5 percent from January, slightly better than the 3.6 percent decline estimated by economists polled by Thomson Reuters. The 10-city composite index fell 3.6 percent.
Fifteen of the 20 major cities saw month-over-month prices improve in February. Atlanta, Chicago, Cleveland and Detroit fared worse, while Washington DC's rate remained unchanged.
While there might be pieces of good news in this report, such as some improvement in many annual rates of return, February 2012 data confirm that, broadly-speaking, home prices continued to decline in the early months of the year, David M. Blitzer, Chairman of the Index Committee at S&P Indices, said in a statement.
Housing has been a main drag on the economic recovery, as homeowners have struggled with foreclosures or mortgage burdens that far exceed the values of their homes.
Average home prices across the U.S. are back to the levels where they were in late 2002 for the 20-City Composite and to early 2003 levels for the 10-City Composite. Prices have hit new lows in the current housing cycle and are 35 percent lower than the peak of the market in 2006.
On a year-over-year basis, Atlanta continued to be one of the worst-performing markets, with a historically low 17.3 percent decline in prices compared to the previous year. This was the fifth consecutive month of double-digit negative returns for Atlanta and the lowest annual return in its 20-year history.
Five of the 20 major cities saw positive annual returns -- Denver, Detroit, Miami, Minneapolis and Phoenix. Phoenix, which is one of the cities that fared the worst during the crisis, has now posted two consecutive months of positive annual returns and five consecutive positive monthly returns. However, it is still down 54.2 percent from its peak.
While overall pricing fell during the past three months we regard the actual activity in the period to be a necessary first step toward a recovery, said John Tashjian, principal at Centurion Real Estate Partners in New York. Mortgage rates remaining low and individual homebuyers cautiously re-entering the market, replacing investors, are both healthy signs for the housing market.