March 2010 Housing Affordability Index and February 2010 Case-Shiller Home Price Index

Click graph for larger image

The National Association of Realtors’ (NAR) Housing Affordability Index remained near record highs in March. However, at 170.6, the index was down 3.3 percent from February’s value of 176.5 due to higher home prices. Despite the drop, the index remains 7.7 percent above July 2009’s low point.

Meanwhile, data released by Standard & Poor’s for its Case-Shiller Home Price Indices showed that year-over-year rates of change in the 10- and 20-city composites were positive in February (the latest data available) for the first time since December 2006.

Click graph for larger image

Although home prices in nine of the 20 metro areas improved on a year-over-year basis, San Diego was the only market that showed improvement between January and February.

Click graph for larger image

"Beginning last November, each [Case-Shiller] report showed gains as fewer cities reported year-over-year declines than in the previous month; those gains ended with this report," said David Blitzer, chair of the Index Committee at Standard & Poor's. “Further, in six cities prices were at their lowest levels [in February] since the prices peaked three-to-four years ago. These data point to a risk that home prices could decline further before experiencing any sustained gains…It is too early to say that the housing market is recovering. Nineteen of the 20 metropolitan statistical areas [MSAs] and both Composites declined in February over January. Fourteen of the MSAs and both Composites have now fallen for at least four consecutive months. In addition, prices reached recent new lows for six cities in February (Charlotte, Las Vegas, New York, Portland, Seattle and Tampa) sending a more cautionary message compared to the annual figures. While 14 MSAs and the two composites show improvement over their trough values reached in the spring 2009, we are not completely out of the woods.

"Existing and new home sales, inventories and housing starts all show tremendous improvement in their March statistics,” Blitzer continued. “The homebuyer tax credit, available until the end of April, is the likely cause for these encouraging numbers and this may also flow through to some of our home price data in the next few months. Amidst all the news, however, we should also pay heed to foreclosure activity, which have reached their highest level in at least the last five years. As these homes are put up for sales, we may see some further dampening in home prices."