In October 2011, the 10- and 20-City Composites recorded annual returns of -3.0% and -3.4%, respectively. Both Composites and 14 MSAs – Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington DC – saw their annual rates improve in October compared to September.

“There was weakness in the monthly statistics, as 19 of the cities posted price declines in October over September,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “Eleven of the cities and both composites fell by 1.0% or more during the month. And even though some of the annual rates are improving, 18 cities and both Composites are still negative. Nationally, home prices are still below where they were a year ago. The 10-City Composite is down 3.0% and the 20-City is down 3.4% compared toOctober 2010.

“In the October data, the only good news is some improvement in the annual rates of change in home prices, with 14 of 20 cities and both Composites seeing their annual rates of change improve.  The crisis low for the 10-City Composite was back in April 2009; whereas it was a more recent March 2011 for the 20-City Composite.  The 10-City Composite is about 2.4% above its relative low, and the 20-City Composite is about 1.9%.

“Atlanta and the Midwest are regions that really stand out in terms of recent relative weakness.  Atlanta was down 5.0% over the month, after having fallen by 5.9% in September. It also has the weakest annual return, down 11.7%. Chicago, Cleveland, Detroit and Minneapolis all posted monthly declines of 1.0% or more in October.  These markets were some of the strongest during the spring/summer buying season.  However,Detroit is the healthiest when viewed on an annual basis. It is up 2.5% versus October 2010. Atlanta,Cleveland, Detroit and Las Vegas are four markets where average prices are below their January 2000levels; and Atlanta and Las Vegas posted new lows in October.

“Some of the other housing statistics posted relatively healthy figures for November, but it seems that most of the good news was confined to the multi-family sector.  Existing home sales rose in November, but are still at a low annual rate of about 4.0 million.  Single family housing starts also rose, but remain close to record lows and are still down about 1.5% versus October 2010.”
As of October 2011, average home prices across the United States are back to the levels where they were in mid-2003. Measured from their June/July 2006 peaks through October 2011, the peak-to-current declines for the 10-City Composite and 20-City Composite are -31.9% and -32.1%, respectively. The recovery from recent lows are +2.4% and +1.9%, respectively. The 10-City Composite hit its crisis low inApril 2009, whereas the 20-City reached a more recent low in March 2011.

At +0.3%, Phoenix was the only one of the 20 MSAs that posted a positive monthly change. The 10-City and 20-City Composites were down -1.1% and -1.2%, respectively, from their September 2011 levels.

The table below summarizes the results for October 2011. The S&P/Case-Shiller Home Price Indices are revised for the 24 prior months, based on the receipt of additional source data. More than 24 years of history for these data series is available, and can be accessed in full by going towww.homeprice.standardandpoors.com

“A high number of foreclosed homes and mortgage defaults continue to deflate real home prices and further lower consumers’ net worth,” explained Carl Steidtmann, Deloitte’s chief economist and author of the monthly Index.  “In recent months however, consumers have sustained their spending and the savings rate has declined, while real wages and employment growth remain stagnant.”

The Index, which comprises four components — tax burden, initial unemployment claims, real wages, and real home prices — fell to 1.75 from an upwardly revised reading of 1.96 the previous month.  The Index is at the lowest level since April 2009.

“Many consumers are showing seasonal cheer when it comes to holiday shopping; however, they are also well-informed and making calculated decisions before buying,” said Alison Paul, vice chairman and U.S. retail & distribution sector leader, Deloitte LLP.  “Retailers are increasing their staffing levels to provide a positive in-store experience and help consumers with their holiday shopping lists.”

“The retail sector added more people to their payrolls last month, showing the strongest November increase in retail jobs since 2007.  With more associates in the stores to provide one-on-one customer assistance, retailers may be able to increase shoppers’ basket size and conversion rates during an otherwise competitive season,” Paul added

Highlights of the Index include:

Tax Burden: The tax burden rose slightly to 11 percent.  While a rising tax burden is typically a sign of an improving economy, in this case it is likely more of a drag on spending as state and local governments began increasing taxes to address budgetary shortfalls.

Initial Unemployment Claims: Initial unemployment claims moved slightly lower to 405,200 after hovering around the 400,000 mark the past six months.

Real Wages: Real wage growth was stagnant this month as energy prices eased.

Real Home Prices: Real home prices fell sharply again this month and are down on average over the past three months 5.9 percent from a year ago.  The housing market appears to be contracting despite record low mortgage rates and the Federal Reserve’s effort to drop them even further.