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US home prices hit 10-yr low

The US housing market started off the new year without any fanfare. Home prices dropped for the 5th month running in January, reaching their lowest point since the end of Y 2002.

The average home sold in that month lost 0.8% of its value, compared with a month earlier, and prices were down 3.8% from 12 months earlier, according to the S&P/Case-Shiller home price index of 20 major markets.

Home prices have fallen 34.4% from the highs set in July, 2006.

“Despite some positive economic signs, home prices continued to drop,” said a spokesman for S&P. “Eight cities: Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa made new lows.”

Only 3 of the 20 index cities registered gains in January, led by Phoenix, which climbed 0.9% month-over-month, Washington, + 0.7%, and Miami, + 0.6%.

Housing market indicators have sent confusing signals so far this year, with existing home sales and new home sales are down M-M in February, but + Y-Y.

Potential home buyers are not confident in the market. The big problem is the massive number of potential foreclosures.

Potential US buyers see that there are millions of homes underwater, and at elevated risk of foreclosure, and conclude that housing values are not likely to appreciate for many years to come.

That said, home builders have turned more Bullish and are gearing up for more new construction. Mortgage rates are also still very favorable and the economy is getting better with hiring on the rise. The recovery will take a long time and in some areas of the US may not recover.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.

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