Unemployment Fuels Price Drop in 3 of 4 Regions
Denver-Mortgage services solutions provider Integrated Asset Services LLC here finds that at the U.S. Census region level declines in house prices correlate to initial unemployment claims in the respective areas.
Of the four regions, the IAS360 Index reported the Midwest falling the most in March, with a 2.5% drop for the month.
According to IAS, the Bureau of Labor Statistics reported the Midwest registering the highest number of initial unemployment claims at 81,957 for the same period.
House prices fell 1.3% in the South, 0.8% in the West and remained unchanged in the Northeast, which also reported the smallest number of initial jobless claims.
The hope to see light at the end of the tunnel resurfaced as in March home prices continued to drop - slightly.
The latest IAS360 House Price Index showed national house prices fell another 1% in March, compared to a 3% drop in February.
"There was at least some leveling off in house prices for March but it's too soon to call it a rebound in the housing market," said Dave McCarthy, president and CEO of Integrated Asset Services.
"We'll keep looking at prices at the county level to see if there's any cumulative light emerging at the end of the tunnel."
Data through February showed continued broad-based declines in the prices of existing single-family homes across the United States, according to Standard & Poor's Case-Shiller Home Price Indices, with 10 of the 20 metro areas showing record rates of annual decline, and 15 reporting declines in excess of 10% compared to February 2008.
In January, the IAS360 index showed a 3.5% decrease marking "the worst single-month decline ever."
Reports through the end of March indicate the hope to see light at the end of the tunnel by yearend is not supported by the data.
Yet every improvement, however small, fuels hope the market is headed into the right direction.
On a year-over-year basis, U.S. house prices are now down 13.9%.
IAS said the housing price downturn reached 10.7% on a year-to-year basis since September when the economy began unwinding.
IAS360 also shows prices down 17.7% from the height of the real estate bubble in 2006.
Back in February, Standard & Poor's reported that the three worst performing cities continue to be from the Sun Belt, each reporting negative returns in excess of 30%.
Phoenix was down 35.2%, Las Vegas declined 31.7% and San Francisco fell 31%. Dallas, Denver and Boston faired the best in terms of annual declines down 4.5%, 5.7% and 7.2%, respectively.
"We witnessed some deceleration in the rate of decline in some of the markets," says David M. Blitzer, chairman of the Standard & Poor's index committee.
"All 20 metro areas recorded a decline in February, but 16 of the 20 metro areas saw an improvement in their monthly returns compared to January. This is the first month since October 2007 where the 10- and 20-city composites did not post a record annual decline. We will certainly need a few more months of data before we can determine if home prices are finally turning around."
By March, IAS360 reported, among metropolitan statistical areas five out of the 10 largest in the U.S. are down 20% or more since the housing market crashed in December 2006.
The San Francisco Bay Area, the country's hardest-hit MSA, fell another 3.1% in March, mostly the result of Alameda County, which declined 10.6%. Las Vegas, the nation's second most distressed MSA, was down 2.7%. Los Angeles, meanwhile, IAS said, "appeared as one of the few bright spots anywhere, with house prices gaining 0.2% for the month, the first time this MSA has seen an increase since April 2008."
The IAS360 House Price Index is a housing index tracking monthly change in the median sales price of detached single-family residences across the U.S.