Single-family home prices dropped into double-dip territory in March as the housing market remained bogged down by inventory and weak demand, a closely watched survey said on Tuesday.
KEY POINTS: * The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.2 percent in March from February on a seasonally adjusted basis, in line with economists' expectations. * The price index was below the low seen in April 2009 during the financial crisis. The glut of houses for sale, foreclosures, tight credit and weak demand have kept the housing market on the ropes even as other areas of the economy start to recover. * The 20-city composite index was at 138.16, falling below the 2009 low of 139.26.
STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO IN GREENWICH, CONNECTICUT:
For the equity markets and others it is not a surprise given the trends that are emerging since the incentive came off the table about a year ago. We have continued to see this decline and there are still no signs of stability.
ROBERT BRUSCA, CHIEF ECONOMIST, FACT AND OPINION ECONOMICS, NEW YORK:
The Case-Shiller numbers, they're not may favorite report because the numbers kind of lag by a month. We had seen in a report from the National Association of Realtors that existing home prices seem to show more stability than these numbers have been showing. I guess I'm not all that surprised that they're a little bit weaker. But there had been some indication that home prices might stabilize after we saw some better existing home sales.
KURT KARL, CHIEF U.S. ECONOMIST, SWISS RE, NEW YORK:
This is definitely not good news. It is not a huge drop -- it is disconcerting but not unexpected. It has been trending down and seems to be very strongly connected with the volume of foreclosures and houses coming on the market in a distressed manner. The bad news is, it dampens demand for buying and building new homes because you don't want to buy into a falling market.
It is going to be a while before housing turns, although I am still optimistic for late this year or into next year. Households are growing at about one percent per year so there is an implicit demand building and it will come around to stimulating the markets.
CARY LEAHEY, ECONOMIST AND MANAGING DIRECTOR, DECISION ECONOMICS, NEW YORK:
The Case-Shiller report is disappointing, but not unexpected. On the seasonally adjusted figures, the decline in March was 0.2 percent which is about the pace of the last two or three months and is not as big a decline that occurred three to six months ago; so one can argue that the pace of decline is not as bad as it was three to six months ago.
The other metric people look at is the year-ago decline and that did pick up to -3.6 percent versus -3.3 percent in February. This is the double dip everyone is talking about, meaning that a year ago home prices were up as much as 4 to 4.5 percent, but since then they have fallen almost 4 percent. So the declines sustained in the last 12 months have almost erased the gains of the previous 12 months. The housing market is treading backward, but not drowning.
JAMES O'SULLIVAN, CHIEF ECONOMIST, MF GLOBAL, NEW YORK
The numbers have been slipping again recently. They have been flat for about two years now. On balance, housing is still not showing a rebound.
This is still a huge glut of vacant home inventory. Meanwhile, home prices have declined pretty sharply, which make them pretty competitive in some markets. Home prices should stabilize if employment continues to improve.
In the past, housing has been a leading indicator. In this economic cycle, given the huge amount of inventory, it is a lagging indicator. For now, housing is still quite weak. It is still not contributing to growth.
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:
March's S&P Case-Shiller house prices index (20 city) slipped to -3.6% yr/yr from -3.4% (revised from -3.3%) in February, underperforming a market expectation for a 3.3% decline, and delivering the weakest yr/yr outcome since November 2009. The yr/yr pace has been steadily deteriorating since reaching a positive 4.64% in May 2010 when a temporary tax credit for buyers was expiring. On a monthly basis the 20 city index fell by 0.8% before seasonal adjustment and by 0.2% after seasonal adjustment, the latter being the third straight decline of 0.2%.
MARKET REACTION: STOCKS: U.S. stock index futures maintained gains. BONDS: U.S. bond prices were steady at lower prices. FOREX: The dollar was little changed.