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Home Price Increases Ease in August

The S&P/Case-Shiller 20-city index of home prices rises 1.7% in August, in a weaker-than-expected rise.

(Updated with additional data and commentary.)



) -- Home prices across the U.S. ticked up 1.7% in August year-over-year.

The S&P/Case-Shiller 20-city index of national home prices rose in August month-over-month on a seasonally adjusted basis, after a 3.18% gain in the prior month. But the uptick disappointed market watchers who expected the index to rise a more robust 2.1%.

Fifteen of the 20 cities measured in the index showed a decrease in home prices month-over-month. Twelve of the 20 posted negative annual growth rates, two more than were reported in July. The S&P/Case-Shiller 20-city index is a moving three-month average, so data for August was swayed by data from June and July.

While still negative, the three metropolitan statistical areas, or MSAs, that showed improvement in August home prices compared with July were Charlotte, Cleveland and Las Vegas with annual growth rates of -3.4%, -0.4% and -4.5%, respectively.

"A disappointing report," said David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "Home prices broadly declined in August. Seventeen of the 20 cities and both

the 10-city composite and 20-city composite saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows."

"Over the last four months both the 10- and 20-city composites show slowing growth, after sustaining consistent gains since their April 2009 troughs."

"The month-over-month growth rates tell the same story," he went on. "Indeed, the housing market appears to have stabilized at new lows. At this time, it does not seem that any of the markets are hanging on to the temporary momentum caused by the

homebuyers' tax credits."

The housing market has been under tremendous pressure for some time, and demand fell further after the

springtime expiration of federal tax credits for homebuyers

that offered credits up to $8,000 for first-time buyers and $6,500 for those buying new primary residences.

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At 10 a.m. Tuesday the Federal Housing Finance Agency will report on its house price index for August. Economists will be looking to see whether the index improved from July's decline of 0.5%.

On Monday

National Association of Realtors reported that existing-home sales rebounded 10% in September to a better-than-expected seasonally adjusted annual rate of 4.53 million units.

>>Existing-Home Sales Rise 10%

Despite the better-than-expected rebound, September's existing-home sales data remains the third worst rate on record and 19.1% below year-earlier levels when first-time homebuyers were rushing to take advantage of those federal tax credits.

The report also showed that the national median existing-home price for all housing types was $171,700 in September, 2.4% below year-earlier prices and lower than $178,600 in August.

"I guess the numbers are reassuring but the housing market is still not back to where it was during the

first-time homebuyer's tax credit surge," John Canally, economist for LPL Financial, told



The U.S. housing market has been "bouncing along the bottom on home sales since early 2009," Canally added, and while conditions have improved since then the market remains "kind of directionless."

A report on new-home sales in September is due to be released on Wednesday. The consensus call is for sales of newly built homes to have risen to a seasonally adjusted annual rate of 299,000 in September,

up from 288,000 in August, according to consensus estimates listed on


Stocks in the homebuilder sector were , as were

the major stock indexes, as market watchers waded through the latest round of earnings news and awaited consumer confidence data. The

SPDR S&P Homebuilders

(XHB) - Get SPDR S&P Homebuilders ETF Report

, an exchange-traded fund that tracks the homebuilder sector, fell 0.4% in premarket trading while the

iShares Dow Jones US Home Construction

(ITB) - Get iShares U.S. Home Construction ETF Report

ETF lost 0.3%.


(PHM) - Get PulteGroup, Inc. Report

shares were lower by 0.7% in premarket activity;

Beazer Homes

(BZH) - Get Beazer Homes USA, Inc. Report

, lost 1.4%.

Shares of


(NVR) - Get NVR, Inc. Report

, which beat top- and bottom-line quarterly expectations last week even as earnings fall nearly 40%, were flat.

KB Home

(KBH) - Get KB Home Report

, bid up 0.2% before the opening bell, and



, 0.7%.

>>NVR Beats as Profits Tumble

-- Written by Miriam Marcus Reimer in New York.

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