S&P Exec: Follow Prices to Find End of Bust

Want to know when the housing downturn finally turns up? Follow the money, says the man in charge of indices at Standard & Poor's. More than unsold inventories, more than foreclosures, house prices hold the key to when the bust is over, said David Blitzer, an S&P managing director and chairman of the company's index committee, at the Consumer Bankers Association's annual Home Equity Lending Conference in Austin, Texas. "I'd watch prices very carefully," he said. "That's where we'll see the first meaningful turn." Mr. Blitzer, who held out S&P's Case-Shiller Home Price Index as the most accurate measure of home pricing trends, explained that prices tend to change more quickly than other measures in response to either euphoria or pessimism. "In the housing market, prices offer a good sense of buyers' and sellers' perceptions of what's going on, and are therefore a very good indicator," he told the conference. S&P chief economist David Wyss has said that prices should bottom out in the first half of 2010 at about 30% below their peak. But even at that, Mr. Blitzer pointed out, prices in most markets will be "well above" where they were 10 years earlier. The S&P executive also noted that over the last three months, more than a half-dozen cities covered in the Case-Shiller 20-market index showed month-to-month gains.