Following four straight months of housing gains, the S&P/Case-Shiller Home Price Indices indicated this morning that previous gains from earlier in the year had leveled off in October. The S&P/Case-Shiller Home Price Indices covers 20 of the nation's largest metropolitan regions, while measuring the residential housing market by tracking the changes in home values. From one year earlier, the index is down 7.3%, while only 7 of the 20 regions recorded gains from the previous month.
"Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip," said David Blitzer, S&P's chief economist. Blitzer added, "The turnaround in home prices seen in the spring and summer has faded." Some analysts believe the gains in the housing market witnessed earlier in the year were artificially inflated due in large part to government initiatives to stimulate the economy. They assert that the stabilization of the housing market can be attributed to the low current mortgage rates, coupled with the influence of the $8,000 first-time homebuyer tax credit.
The index reports that the hardest hit regions of the country have experienced only moderate declines, which may indicate a continuation of market stabilization as the supply of homes gradually decreases. According to Michael Larson, an interest rate and real estate analyst with Weiss Research, Inc. said, "Inventories are plunging on the new-home side and going down for existing homes." As home supplies continue to fall, conditions will continue to stabilize.
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