Today’s release of the S&P/Case-Shiller home price indices for May 2009 showed the first month-to-month gain in 34 months (almost 3 years!).

Clearly this is a notable development but it’s important to put today’s results in perspective before getting to confident that even the initial leg of the declining trend has ceased.

• First, it’s important to recognize that while many of the more seasonal series (Boston, Cleveland, Washington DC, etc.) are showing typical strong spring-summer bounces, many of the hardest hit markets (Phoenix, Los Angeles, Miami, etc)… markets with almost no seasonal variation, are showing only tepid declines.
• Further, many of the more seasonal markets, at the moment, are some of the weakest and appear poised (after the typical spring-summer bounce completes August and September) to drop to new lows throughout the fall.
• So, today’s Composite results are being, in a sense, propped up by the collective movement of many strong seasonal markets that are themselves actually very weak but are currently at their strongest point in the season.Another way of looking at it is to simply view the seasonally adjusted S&P/Case-Shiller data showing both Composite series declining since last month.Also, looking at the 90s-era comparison charts below its obvious that even after the main downward thrust has been reached, the housing markets have a long tough slog ahead with the ultimate bottom likely many years out… Or if we are currently experiencing the Japanese model… decades out.
  
• The 10-city composite index declined 16.83% as compared to May 2008 while the 20-city composite declined 17.06% over the same period.

Topping the list of regional peak decliners were …..

• Phoenix at -54.46%,
• Las Vegas at -53.36%,
• Miami at -48.52%,
• San Francisco at -44.97%,
• Detroit at -44.86%,
• San Diego at -42.05%,
• Los Angeles at -41.89%,
• Tampa at -41.05%,
• Minneapolis at -35.85%,
• Washington DC at -32.49%,
• Chicago at -26.64%, Seattle at -22.55%,
• Atlanta at -22.55%,
• Seattle at -22.54%,
• Portland at -21.20%,
• New York at -21.00%
• Boston at -18.46%.

Additionally, both of the broad composite indices showed significant declines slumping -33.27% for the 10-city national index and 32.29% for the 20-city national index on a peak comparison basis.

This analysis highlights both how young the current housing decline is and clearly shows that the latest bust has surpassed the prior bust in terms of intensity. As you can see the last downturn lasted 97 months (over 8 years) peak to peak including roughly 43 months of annual price declines during the heart of the downturn.

Tags: cre, shiller index, some green shoots

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