Home prices down, but rate of loss eases

S&P/Case-Shiller index of 20 major cities falls for 31st straight month, but annual rate is not a record low for the first time since October 2007.

NEW YORK (CNNMoney.com) -- The weak housing market continued to plague home sellers in February as home prices extended their losing streak to 31 consecutive months, according to a report issued Tuesday.

However, the rate of decline slowed, with the S&P/Case-Shiller 20-city home price index not hitting a record low for year-over-year drop for the first time since October 2007.

"We will certainly need a few more months of data before we can determine if home prices are finally turning around," said David Blitzer, chairman of the index committee at Standard and Poor's.

The index fell 18.6% from February 2008, compared with a 19% year-over-year decline in January. The index was also down 2.2% from January. The index has not recorded a price rise since July 2006 and has fallen 30.7% since that peak.

"I don't think it's great news," said real estate analyst Mike Larson of Weiss Research. "It's just a moderation in the monthly declines and it fits in with the pattern we're seeing of things getting less bad."

"But it's still a weak market. The patient has moved out of intensive care unit but it's still in the long-term care ward," he added.

Moderation: This is the second time in the past several months that the decline trend has seemed to moderate, according to Ken Goldstein, an economist with the Conference Board.

"The first occurrence proved to be a ledge on the way down to the bottom," he said. "We're probably closer to the bottom now."

The leveling off has had a positive impact on consumer confidence, which jumped suddenly this month, although still at historically poor levels.

"Consumers are no longer in despair," said Goldstein. "They're just depressed."

More and more markets are reaching a balance point, according to Bernard Markstein, senior economist with the National Association of Home Builders (NAHB), where prices should level off. He cites other stats, such as stabilizing new and existing home sales, that indicate we're coming to an end of the housing market meltdown.
"By the end of the year, we should be on the slow road to recovery," he said.

Cities: Of the 20 cities tracked by the index, 16 recorded a slower decline in February than the month before.
No index city has fared as poorly as Phoenix, where prices have fallen 35.2% over the past 12 months and 4.5% in January. Prices are down 51% from their peak.

But Phoenix is hardly unique, according to Larson. He said that if you ask any real estate agent in any of the once overheated markets, he or she will tell you that prices in many neighborhoods are off 40% to 50% from their highs.
Las Vegas, which has recorded more foreclosures than any other city, is close behind Phoenix with a 31.7% year-over-year loss and a drop of 3.6% for the month. Prices there are off 48.4% from their peak.

Other big losers include San Francisco, down 31% over the past 12 months and 3.3% for the month; Miami, down 20.5% year-over-year and 3% month-over-month; and Los Angeles, 24.1% lower on an annual basis and down 2% on a monthly basis.

The housing bust has touched some of the cities on the list less severely. In Dallas, prices were down 4.5% annually and 0.2% monthly. Denver showed a 5.7% annual drop and a 1.7% monthly dip, and Boston was 7.2% lower on a yearly basis and 1.3% monthly.

That price declines did not accelerate in February is certainly a positive change, according to Goldstein, showing that the housing crisis is beginning to let up a little.

"Still, we're in a deep hole, one that will be tough to climb out of," he said.

By Les Christie, CNNMoney.com staff writer
Last Updated: April 28, 2009: 12:08 PM ET

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