Following the now long-gone LTRO induced risk ramp through March, many of the C-grade economists out there predicted that housing would bottom in March (this time for real) and it would be smooth sailing from there. Alas, the just released March Case Shiller data puts this latest speculation very much in doubt (once again), following a miss of consensus expectations in the Top 20 Composite of a 0.20% increase, printing at half that, or 0.09%, and more importantly, a decline from the February rate of increase, which was 0.15%. The non-seasonally adjusted number declined by 0.03%, the 7th consecutive drop in a row. All this begs the question: did housing just quadruple dip, with a February local extreme in the Sequential rate of change. As the chart below shows, we had comparable peaks in the summer of 2009, in April 2010, and again in April 2011, following which the downward slide resumed every single time once the temporary benefits of monetary and fiscal easing subsided. Also, recall that March was the last month receiving benefits of a record warm winter: in effect a mini demand pull program. And now comes the hangover. Bottom line: based on a broad index, housing is about to decline once again, and make a total joke out of all those who, yet again, made "bold" annual housing bottom predictions.
[8]
From the report [9]:
The national composite fell by 2.0% in the first quarter of 2012 and was down 1.9% versus the first quarter of 2011. The 10- and 20-City Composites posted respective annual returns of -2.8% and -2.6% in March 2012. Month-over-month, their changes were minimal; average home prices in the 10-City Composite fell by 0.1% compared to February and the 20-City remained basically unchanged in March over February. However, with these latest data, all three composites still posted their lowest levels since the housing crisis began in mid-2006.
In addition to the three composites, five cities - Atlanta, Chicago, Las Vegas, New York and Portland - also saw average home prices hit new lows. This is an improvement over the nine cities reported last month.
“While there has been improvement in some regions, housing prices have not turned,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “This month’s report saw all three composites and five cities hit new lows. However, with last month’s report nine cities hit new lows. Further, about half as many cities, seven, experienced falling prices this month compared to 16 last time.
“The National Composite fell by 2.0% in the first quarter alone, and is down 35.1% from its 2nd quarter 2006 peak, in addition to recording a new record low. The 10- and 20-City Composite mimic these results; also down about 35% from their relative peaks and hit new lows.
“There are some better numbers: Only three cities – Atlanta, Chicago and Detroit – saw annual rates of change worsen in March. The other 17 cities and both composites saw improvement in this statistic, even though most are still showing a negative trend. Moreover, there are now seven cities – Charlotte, Dallas, Denver, Detroit, Miami, Minneapolis and Phoenix – where the annual rates of change are positive. This is what we need for a sustained recovery; monthly increases coupled with improving annual rates of change. Once we see this on a broader level we will be able to say the market has turned around.
“The regions showed mixed results for March. Twelve of the cities saw average home prices rise in March over February, seven saw prices fall and one – Las Vegas – was flat. The Composites were largely unchanged with the 10-City down only 0.1% and the 20-City unchanged. After close to six consecutive months of price declines across most cities, this is relatively good news. We just need to see it happen in more of the cities and for many months in a row. Since we are entering a seasonal buying period, it becomes very important to look at both monthly and annual rates of change in home prices in order to understand the broader trend going forward.”
As a reminder, all of the above is really generically worthless, because as Zero Hedge explained, America has not one, but four housing markets, with the bottom and the top presenting the fully indicative bid and ask depending on how motivated the seller is. For now, those holding at the bottom: bank distressed properties and refusing to sell. Soon they will have no choice but to.
[10]