Home prices nationally and in the Bay Area fell more than expected in September and in the third quarter, according to a closely watched index. The continued declines show a still-struggling housing market that is unable to give a boost to the economy.
Nationally, residential real estate prices fell 3.9 percent in the three months ended in September compared with the same period last year, according to the SP/Case-Shiller Home Price Indices. Compared with a year ago, prices fell in 18 of the 20 metropolitan areas tracked by the index, including the San Francisco area, which was down 5.9 percent in the quarter compared with 2010.
“There is no significant momentum, no signs of the housing market contributing to the economy anytime soon,” said Maureen Maitland, vice president of SP Indices, which produces Case-Shiller. “The fact that so many markets were negative does cause us to pay attention. We are on very shaky ground.”
While some seasonal weakness is to be expected after the prime spring selling season, “weakness and negativity do not have to be synonymous,” she said.
In other words, while flat prices might not stir concern, the continued price declines do.
The San Francisco metropolitan area – which Case-Shiller defines as the counties of Alameda, Contra Costa, Marin, San Francisco and San Mateo – is actually among the better-performing regions, despite falling more than the national average.
“San Francisco (metro) has recovered 13 percent from its low in 2009,” Maitland said. “Since then, its prices have been largely increasing, although they have recently fallen down a bit on a year-over-year basis. But two years ago, when there was some recovery, San Francisco was one of the markets that was doing better than others.”
While the nation has undergone a “double dip” in which prices fell, recovered and then fell further, San Francisco has not, she said.
Case-Shiller tracks sales of the same single-family houses over time. It compares changes with a base value of 100, which represents values as of January 2000.
The San Francisco index is now 133.22, meaning that prices here are 33.22 percent above their year 2000 level. The region’s index peaked at 218.37 in May 2006 and hit a low of 117.74 in March 2009.
“Housing is struggling to get up off the mat everywhere,” said Jim Diffley, chief regional economist for IHS Global Insight. “The Bay Area in some ways has been more fortunate than its Sun Belt neighbors. Its economy is doing relatively better.”
IHS predicts that the California market is near bottom and that prices nationally may drop another 7 percent before turning around in mid-2012. “We may have a little further to fall in other parts of the country before we finally get some growth in 2012,” Diffley said.
Patrick Newport, U.S. economist for IHS, said the continued weakness in sales of existing homes bodes poorly for recovery in construction of new homes, typically a major source of job creation. The country is on track to build 600,000 new homes this year, compared with a normal market of 1.4 million new homes.
“This year is probably going to be the worst we’ve ever had for new-home sales and new-home starts,” he said. “Normally, in a recovery, housing is a key sector that gets the economy back on track. Building more homes creates more jobs and has a positive feedback loop.”
The only two regions where prices increased year-over-year were Detroit, where they had tumbled so drastically that they may have hit bottom, and Washington, D.C., where federal jobs buoy the local economy, Maitland said.
Prices nationally rose 0.1 percent in the third quarter compared with the second quarter, which means they were essentially flat.
E-mail Carolyn Said at firstname.lastname@example.org.
This article appeared on page D – 1 of the San Francisco Chronicle