Do not go west, young man – but avoid pretty much everywhere else too. The slump in US house prices has officially gone nationwide, according to the latest Standard & Poor’s/Case-Shiller index. In April, all 20 of the cities tracked posted a year-on-year decline for the first time ever. Western cities, such as Las Vegas and Los Angeles, as well as Florida’s Miami, continued to lead the pack downwards.
Optimists, however, see two reasonably hopeful signs. First, the rate of decline has slowed, with April’s monthly drop in the index of 1.4 per cent comparing relatively well with March’s 2.2 per cent fall. Second, eight cities actually managed a monthly gain.
On closer examination, such hope dissipates. Case-Shiller’s data are rolling averages, so April’s numbers will reflect prices agreed in February and March – when mortgage rates had eased. Since April, rates have climbed steadily and terms have tightened, so May’s reading could see the rate of decline accelerate again.
The regional story is also less inspiring. Of the eight cities that recorded a monthly increase, half had not enjoyed the dramatic run-up in prices seen elsewhere anyway – Cleveland’s index, for example, peaked with a gain of a mere 23 per cent against Miami’s 181 per cent. Similarly, four of the eight cities were among the last to peak, having hit highs within the past 12 months (the index as a whole peaked in July 2006).
Bostonians perhaps have reason to cheer, as their city was the first to peak way back in September 2005 and saw a slight gain in April’s reading. But Charlotte, where prices only hit their highs last August, should brace for more pain, especially given its reliance on the financial sector. On a macro-level, the economic news remains discouraging, with consumer confidence hitting a 16-year low yesterday. Those homebuyers looking for the floor should be wary of the roof caving in on them.