Home prices in 20 U.S. cities dropped in the year ended May by the most in 18 months, adding to evidence the housing market is struggling.
The S&P/Case-Shiller??index??of property values in 20 cities fell 4.5 percent from May 2010, the group said today in New York. The decline matched the??median??forecast of 32 economists surveyed by Bloomberg News.
A pipeline of foreclosures and uneven demand will keep prices from rising this year, discouraging new-home construction and delaying a rebound in housing. Shrinking home equity and an unemployment rate at 9.2 percent are weighing on consumer spending, which accounts for about 70 percent of the economy.
???Home prices have yet to find a bottom,??? said??John Herrmann, senior fixed-income strategist at State Street Global Markets LLC in Boston. ???Buyers are incredibly cautious. They are concerned about the unemployment rate. There is uncertainty about the economic outlook.???
Stock-index futures erased earlier gains after the report. The contract on the Standard & Poor???s 500 Index maturing in September was down less than 0.1 percent at 1,333.3 at 9:19 a.m. in Ne
w York. Treasury securities were little changed.
Estimates ranged from declines of 5.2 percent to 3.5 percent. Year-over-year records began in 2001.
The home-price index was revised to show a 4.2 percent drop in the year ended in April from the previously reported 4 percent decrease, according to today???s report.
Prices were??little changed??in May from the prior month after adjusting for seasonal variations, following an April increase of 0.4 percent. Unadjusted prices climbed 1 percent from the prior month, a second consecutive increase.
???The concern is that much of the monthly gains are only seasonal,?????David Blitzer, chairman of the index committee at S&P, said in a statement. ???Sustained increases in home prices over several months and better annual results need to be seen before we can confirm real estate market recovery.???
The year-over-year gauge provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.
The Case-Shiller gauge is based on a three-month average, which means the May data was influenced by transactions in April and March.
Nineteen of the 20 cities in the index showed a year-over- year decline, led by a 12 percent plunge in Minneapolis. Washington showed the only increase, up 1.3 percent from May 2010.
Eleven cities saw a worsening in their year-over-year price changes.
Other reports signal the housing market is held back by rising unemployment and foreclosures. Sales of previously owned homes declined in June to a seven-month low, according to data from the National Association of Realtors. Inventories rose, more contracts were canceled and 30 percent of transactions last month were of distressed dwellings, the group said.
The Commerce Department may report today that sales of new homes ran at a 320,000 annual pace in June, little changed from 319,000 in May, according to the median forecast of economists surveyed by Bloomberg.
The Federal Housing Finance Agency reported last week that home prices fell 6.3 percent in May from a year earlier. The FHFA report is based on repeat-sales data that compares prices of the same properties over time. The regulatory agency measures sales of homes with mortgages backed by Fannie Mae and Freddie Mac.
As house values decline, owners feel less wealthy and the home equity they can borrow against shrinks.
The lack of a housing rebound is hurting companies that sell related products.??Sherwin-Williams Co., the largest U.S. paint retailer, last week reported an unexpected drop in second- quarter profit. The Cleveland-based company cut its full-year profit forecast because of rising raw material costs, and said uncertainty in housing is affecting demand for repainting.
???We???re still in a market that is clearly bouncing along the bottom on housing and new construction,??? Chief Executive Officer Christopher Connor said during a conference call with analysts on July 21. ???There is still quite a bit of uncertainty in this market.???
============================================================ 1-months 3-months 1-year 2-years 3-years earlier earlier earlier earlier earlier ============================================================ US Composite-20 1.02% 0.63% -4.51% -0.08% -17.04% ------------------------------------------------------------ Boston 2.66% 0.76% -3.19% 1.49% -5.84% Minneapolis 2.58% -1.24% -11.71% -1.39% -22.74% Washington DC 2.44% 2.57% 1.27% 9.09% -7.21% San Francisco 1.83% 3.43% -5.44% 11.87% -17.38% Chicago 1.72% -1.10% -8.11% -9.47% -25.30% Denver 1.37% 2.26% -3.31% 0.18% -4.42% Cleveland 1.28% 0.37% -6.58% -3.16% -9.18% Portland 1.25% 0.63% -9.11% -8.48% -23.37% Miami 1.18% 0.12% -5.28% -4.14% -28.26% ============================================================ 1-months 3-months 1-year 2-years 3-years earlier earlier earlier earlier earlier ============================================================ Seattle 1.05% 2.79% -6.99% -8.32% -23.57% Atlanta 1.01% 2.14% -4.64% -2.95% -17.25% Dallas 0.86% 0.44% -4.73% -1.88% -6.00% Charlotte 0.81% 0.30% -5.11% -7.81% -17.06% New York 0.70% 0.54% -3.23% -3.63% -15.07% Los Angeles 0.52% 0.49% -3.21% 6.21% -14.84% San Diego 0.18% -0.17% -5.11% 6.70% -13.06% Phoenix 0.04% -0.41% -9.55% -3.05% -36.18% Tampa -0.59% -1.97% -9.54% -10.87% -29.38% Las Vegas -0.90% -2.73% -6.60% -12.69% -40.66% Detroit -2.79% -8.24% -9.26% -11.48% -33.15% ============================================================
To contact the reporter on this story:??Shobhana Chandra??in Washington email@example.com